More insight into interest only mortgages.

Interest-only mortgages make for sound financial investments during a real estate boom. Interest-only mortgages aren't a new offering. They made their first appearance during the 1920's, but were usually only available to "preferred" customers of the banks who offered them.

Interest-only mortgages are available from many national and regional wholesale lenders and investors who make this "born again" loan available to consumers. This particular method of mortgage payment may be good for people who are looking to buy a house that is slightly more expensive than what they could afford using a traditional mortgage. In fact, this is one of the main reasons people use an interest-only mortgage. It is possible to purchase a $200,000 home and save almost $300 a month in payments using this type of mortgage. This is because for the first five, 10 or 15 years of the mortgage, most of the monthly payment can be applied toward the interest portion of the mortgage. When the set, predetermined number of years has expired, the $300 that was saved is added back into the monthly payment, and applied toward the principle of the mortgage.

Let’s look at the pros and cons of interest-only mortgages...

The primary "pro" of this mortgage is that people are able to purchase a more expensive home than they could by using traditional home mortgage loans. Also, these mortgages typically come with some of the lowest interest rates that are available on the market... even when compared to five year adjustable rate mortgages. These low interest rates, of course, translate into lower monthly payments.

With interest-only mortgages most people will only live in their homes for around three to five years before buying another, and will more than likely spend a very high percentage of their monthly payments on interest anyway. It may make sense to go ahead and bite the bullet, and make payments apply only to the interest-portion of their mortgage in order to have a larger home at a lower monthly payment. As with any type of mortgage, there are a couple of "cons" to this type of mortgage as well. For one, when the agreed-upon period of time that interest-only payments has expired, the monthly payment may increase.

This possible increase in payment should be something that people plan for ahead of time. For people who want to resell their house, they may find their equity has not grown as quickly as it could have. These are just a few of the interest-only mortgages pros and cons.

The main disadvantage to interest-only mortgages could be that in the first few years, no money is paid toward the principle of the mortgage. As a simple example, consider a $200,000 home over a five-year period where the owner is using a traditional mortgage, approximately $13,000 will be paid on the principle of the mortgage. By using an interest-only mortgage, the amount of money paid on the principal could be lower, in fact, it could be "zero" dollars... if you only make interest-only payments. Now, in most real estate markets, this shortcoming is being offset by rapidly rising home prices where equity is gained merely by the home's market value steadily increasing.

Finding a good source for interest-only mortgages can be as simple as using a few keystrokes on your computer keyboard. But, in terms of actually getting approved for the right kind of interest-only mortgage can get a bit "tricky". Depending on your unique borrowing profile... such as your midscore FICO... how much cash you have to work with, if any... what type of property you're buying or refinancing... how long you've had the same source of income... to name just a few considerations, can all have an impact of where and how you might be approved for an interest-only mortgage, and on what terms.

At Mortgage Match we specialize in zero down, interest only mortgages. We've found the very best way for you to discover exactly how an interest-only mortgage would work for you... is to get preapproved for one. Mortgage Match can get you preapproved and answer all your questions at
Mortgage Match Fast Preapproval.

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.

Zero down, interest only mortgages for investors.

There's no doubt you've seen those infomercials on late-night television that tout "getting rich with no cash" by investing in real estate. In our opinion, the worst thing about these schemes is that a large number of them disclose a methodology for taking advantage of people who are enduring what might be tragic, financial circumstances through no fault of their own. The fact is, there are legitimate and effective financing programs available that take advantage of, or exploit, no person's financial problems.

The infomercials in question focus on schemes, many of which are foreclosure-related, where the owner has to be convinced, or sold on the idea to lend you their property's equity, or enter into a high risk (for the seller) deal with you. And although, there are a few sellers out there who are in situations making them naive or desperate enough to work with you, their properties often tend to be of lower quality.

Before proceeding, please note that we are focusing on investment (non-owner-occupied, NOO) properties. If you're looking to buy or refinance a primary residence or home, there are even more opportunities for owner occupied, zero-down mortgages with interest only payment options.

This passage is geared to the investor (especially beginners or novices) who want to start acquiring investment real estate. Unfortunately, your local banks typically want to see you make a down payment of at least 10%, %20%... up to 30% when buying investment (non-owner-occupied, NOO) properties.

Why do banks typically have such a high down payment requirement for investment properties? Because they are more risky. Also, because such down payments have been the norm, historically. Until the government got involved through FHA and Fannie Mae, down payments on owner-occupied purchases were equally as high.

Fortunately, a handful of niche, specialty lenders have stepped into the void to offer 100% financing programs to qualified borrowers and investors.

Zero-down (100%) and high-LTV (90%/95%) programs for investment properties tend to fall into two categories:

Concurrent 80/20 and 70/30 financing programs. These programs arrange two concurrent mortgages to acquire the property. Both mortgages are closed and disbursed at the closing. By splitting the financing between two investors, the risk exposure is also divided between the two investors.

Single 100% mortgage programs. A few lenders offer single loan program financing up to 100% of the purchase price. However, these programs are often limited to condominium units, single-family homes, townhouses and duplexes (two-unit properties).

Both programs tend to have similar program parameters. These programs also tend to take up to a week longer to process and close than standard mortgages... because lenders want to be more careful with mortgages where they will be assuming all of the risk.

Unfortunately, there is not much variety with these programs. Mainly because, there are only a handful of NOO lenders and not nearly as many non-owner mortgages available, as there are with lenders offering zero-down mortgages for owner occupied properties.

These mortgages have additional restrictions and requirements that typical home mortgages do not. Again, these additional requirements are due to the higher risks that lenders take on with these types of mortgages. Consider the three basic reasons why these programs increase a lender's risk exposure:

1). Lower or no down payment. Properties that are purchased with less down payment have higher default rates than properties purchased with greater down payments. The danger for lenders is even greater when the buyer makes no down payment at all.

2). Non-owner-occupied property. The default rate on investment (non-owner-occupied) properties tend to be higher than for mortgages on primary residences. People suffering an income crunch will normally place the priority on their home mortgage, rather than on the mortgage for their investment property.

3). Multi-unit. Mortgages on multi-unit properties tend to have higher default rates than mortgages on single-family homes.

The restrictions and requirements will vary from lender to lender who provide high, LTV mortgages to investors for non-owner occupied properties. Shopping for such mortgages can be very tedious, and may not ever yield the results you're looking or hoping for... rather than going from website to website searching for info that may not even be out there, sometimes it's smarter to talk with an NOO loan consultant, and maybe, even go as far as getting preapproved for an investor loan.

For more information about zero down, interest only, NOO programs for qualified borrowers, preapproval and more, please see: Mortgage Match

Another view of interest only mortgages.

Some people are buying their dream homes with a new type of mortgage.
Interest-only mortgages are a way to get access to a lot of money without having a large monthly payment. Some wholesale mortgage lenders offer interest-only mortgages for as little as 5.15 percent for the first year, meaning if $150,000 is borrowed, the monthly payment would only be $643.75. With a traditional loan at 6 percent, borrowing the same amount would cost $900 each month. So far, those who have taken advantage of interest-only mortgages say they made the right decision.

"It's wonderful. It frees up a lot of other things," says a recent mortgage customer. "If you want to do other investments, or perhaps if you have children that are in school or going to college, it frees up quite a bit."

If consumers have the discipline to invest saved money, they could end up with more in the long run, and some say keeping a home mortgaged at the sale price isn't necessarily bad.

In many cases, it's the only write-off a borrower has, so why would you want to get rid of your mortgage? It's the only good debt to have.

Experts want consumers to remember that the rates on interest-only mortgages can change every year, but many come with the option of converting into a traditional mortgage without penalty.

It's not that hard to get an interest only mortgage loan.

In the mortgage business, mortgage companies that lend money to borrowers are often referred to as "investors". That's mainly because they are actually investing their money in you... with the idea of eventually selling your mortgage to another investor at a profit. So, essentially what investors do is put together products which they can sell to both borrowers and secondary market investors. They develop and refine products to have great appeal to both markets. One of these products is the "interest only mortgage payment option".

This is a product which is quite popular these days... and for good reason. It's a very good program for a lot of borrower's who have varying goals and objectives to achieve... from buying their first home to freeing up funds for investments.

Our website called Mortgage Match presents a very large amount of information pertaining to interest only mortgages, so I won't get into too much on the subject here. My main reason in writing this comment was to inform those who are looking at mortgages, now or in the future, that interest only mortgages can be obtained with FICO scores as low as 580.

In case you don't know, a 580 FICO score is below average credit, and puts the borrower into the "subprime" category. Usually, a borrower sporting a 580 score has had some credit issues and problems like late payments or collection accounts.
Now, these are NOT good things, by any means, to have on your credit reports, but in the case of an interest only mortgage, they won't keep you from qualifying... and for a mortgage shopper, that should be really good news.

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.

Regardless of what you read... interest only mortgages are great!

I happened to have reason to do a search on "zero down, interest only mortgages" in several major search engines. I was a little surprised to see that many of the search results returned, on any combination of: zero down, 0 down, no money down, interest only mortgages or loans, several articles published in newspapers and magazines which presented a negative view of interest only mortgages. These articles, in some cases, actually warned borrowers against getting one of these mortgages.

Well, having worked in the public relations, journalism and news media fields myself at one time, I know very often that reporters and journalists write an article just because... that's what they get paid to do. They're always looking for an "angle" or a slant that's news worthy to fill up the space they're responsible for filling. In a lot of cases, it really doesn't matter whether they believe what they're writing about... it's just information they're dispatching... "food for thought".

Working as a Loan Officer, I've helped dozens of borrowers obtain zero down, interest only payment mortgages. They're a good thing. They've helped a lot of people own their own homes who otherwise may have had a problem.

What so many of the negative articles on interest only mortgages fail to mention or suggest, is that interest only mortgages, just like any other form of credit, can be bad strategies if they're not used correctly. Not using credit cards in an intelligent manner has proved to be very bad for many consumers. Yet, I don't believe I've ever seen or read an article suggesting that credit cards, by their very function, are bad things to have in your wallet.

An interest only mortgage won't be the downfall of any borrower who gets one and uses it for the right reason or reasons. They're wonderful home buying programs which very often are the answer to helping many people buy the home of their dreams.

To learn more about interest only mortgages, or to get pre-approved for one as a purchase or refinance mortgage, go to: MortgageMatch