- BUY A
- SOUTH STATE
Typically, Interest Only Loans last for a period of five or ten years. After that time the principal is amortized for the rest of the loan term. For example, if a home buyer gets a 30 year loan and the first 10 years are interest-only, after the 10 years the principal would be amortized for the twenty years left on the loan.
•Lower monthly payment than a conventional loan.
•You might qualify for a larger loan amount.
•Interest rate might be higher than on a conventional loan.
•Some Interest Only Loans allow you to pay on the principal anytime with no penalty.
•At the end of the interest only time period the principal is amortized over the rest of the loan term.
•You can buy a more expensive home with the same or smaller monthly payment as a conventional mortgage.
•Your income is sporadic but steady over time.
•You think you’ll earn more in the future.
•You put the savings generated from smaller mortgage payments into investments.
•You plan to refinance in a few years.
•You want to skip the starter house and move right to the more expensive home.
•You are buying a home in an area of rapid appreciation and intend to sell for a quick capital gain.
Interest Only Loans make sense if you want to move into a more expensive home while making the same monthly payment of a less expensive home. Just make sure you have made plans to handle the larger monthly payments once the loan converts over to fully amortize at the end of the interest only period.