Interest only mortgages simplified.

The idea behind an interest-only loan is simple... borrowers are not required to pay down any principal for a fixed number of years. For example, on a 30-year mortgage with a five-year, interest only ARM (Adjutable Rate Mortgage), the borrowers would have the option of paying no principal for the first five years. For the remaining 25 years, assuming they continue to carry this interest only mortgage, and do not refinance or sell the property, they would have higher payments, compensating for the first five years.

The biggest upside to an interest only loan is the smaller monthly payments... providing homeowners with more control of their monthly cash flow. The possible downside is that homeowners are building equity by appreciation only... not by paying down their principal. If a homeowner with an interest only mortgage has their property in a depressed real estate market... and there aren't many of those in the U.S. right now... this could be a problem, only if the homeowner doesn't handle the interest only strategy correctly. Most borrowers are either refinancing out of their interest only mortgages just before the interest only option expires, or they had plans of keeping the property for a set period of time, and selling it before this happened. So, interest only mortgages have worked well for borrowers who have had the right idea about getting one in the first place.

They've worked exceptionally well for first-time home buyers, real estate investors, and those borrwers with substantial assets who could see making more money elsewhere... rather than using their money in building equity in their homes.

There are a number of great strategies for what can be done with the money that an interest only mortgage saves. Mortgage Match is the internet's leading website for zero down, interest only mortgages. Get preapproved for your interest only mortgage, or schedule a free, no-obligation, phone consultation with a Mortgage Match Senior Loan Consultant for fast and accurate answers to your interest only mortgage questions, by clicking here.

For more information on zero down, interest only mortgages, please also see...
Zero down, interest only mortgages and The Home Depot.
Interest only mortgages simplified.
Interest only mortgages... they're a good thing.
The benefits of getting preapproved for an interest only loan.
It's not that hard to get an interest only mortgage.
Why it's hard to quickly quote a rate on an interest only loan.
Zero down, interest only mortgages even with bad credit.
FAQs on interest only mortgages.