Interest-Only Mortgage

by David Pham

Benefits of an Interest-only mortgage

A reason to use an interest-only mortgage is to give you a little extra money each month to pay off more expensive debts. Let’s say, for example, that you save $200 a month in payments on a $200,000 interest-only mortgage. If you use that savings to pay off a nasty credit card balance of $1,800 that is costing you 18 per cent per month, you are making wise use of your money. Within six months you can retire the high-rate credit card debt by “borrowing” money from your mortgage payments. After you use an interest-only mortgage for a period of time to pay off some debts and increase your monthly cash flow, you can always refinance to a more conventional mortgage.

Want a Bigger Home?

Another compelling reason to use an interest-only mortgage is that it may allow you to qualify for a bigger mortgage. For example, on a $200,000 mortgage at 6 percent interest rate, your traditional principal and interest payment will be approximately $1,200 a month. However, if you decide to get an interest-only mortgage, you can qualify for a larger $240,000 mortgage and your monthly mortgage payment will still be around $1,200 a month. An interest-only loan may help you afford a bigger nicer home. Please note that you will need to consult with a senior mortgage consultant who can walk you through the mortgage process and explain the difference between qualifying for a traditional 30-year mortgage and an interest-only mortgage.

Flexibility and prior planning are critical to financial success, and you should consider all your options and then take advantage of the ones that are most appropriate to your specific situation.

Optionwide Home Loans provides real estate loans to every homebuyer and homeowner with all types of credit and financing needs. For more information on interest-only mortgage visit us at http://www.Optionwide.com

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David Pham - Optionwide Home Loans

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