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Interest Only
Mortgage Loan
Interest only
loan payments are fixed for a set period of time during which the
borrower pays only the interest portion of the regular monthly
payment. There is no contribution towards the principal during this
period. Once the fixed interest period is over, the loan reverts back
to the original terms. Now, the monthly payments are adjusted so that
the loan amortizes over the remaining mortgage period.
With Interest Only ARMs, borrowers pay only the
interest during the initial fixed period of the loan
(3 or 5 years)
Fixed rates
also available for interest only
Then,
payments adjust to fully amortize the mortgage over the remaining term
as an adjustable
rate
mortgage (unless fixed rate is chosen)
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