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)