5 5 arm mortgage

5 5 arm mortgage
interest only mortgage can be a good opportunity to short-term financing to buy your dream home. Interest only mortgages are risky, you should know what you are in before the opening of an interest only mortgage. Here are the basics of mortgages only interest.

Traditional mortgage loans are fully amortized, so you have a fixed timetable for the payment to pay off the mortgage at the end of the term of the loan. Interest only mortgages are not fully amortized payments during the interest only period. At the end of the term of the loan interest only in a traditional amortized loan with a variable interest rate.

Interest Only Period

Interest only mortgage interest not only for ever, the duration of the interest only period will be in your loan agreement. During the interest only period the mortgage payment based on interest rates this month alone. That is, none of the principle loan balance is repaid. The advantage of this loan is the monthly payment is significantly lower than it would with a conventional loan.

Mortgage Conversion

At the end of time, only the interest of the lender to convert the loan into a traditional mortgage loans. The monthly payment will change to a fully amortized payment for the duration of the loan. The bad news is, you are obliged to apply the full amount of the loan in principle, in a shorter time than with a traditional mortgage. This will lead to a much higher mortgage payment.

Advantages and Disadvantages of Interest Only Mortgages

Interest only mortgages are an excellent short-term solution for homeowners that can not afford fully amortized payments for a short period. The disadvantage is that these interest only payments do not build equity. If you are unable to afford the payments when the lender converts the mortgage, you risk losing your house. To learn more about your mortgage options, how to avoid common mistakes, register for a free mortgage advice.

To get your free mortgage guide RefiAdvisor.com visit the link below.

Louie Latour specializes in homeowners, such as advertisements, to identify common mortgage mistakes and predatory lenders. For a free copy of "Mortgage Refinancing: What You Need To Know," which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com.