{"id":1601,"date":"2009-12-24T14:22:41","date_gmt":"2009-12-24T08:52:41","guid":{"rendered":"http:\/\/www.niftylivecharts.com\/blog\/?p=1601"},"modified":"2009-12-24T14:22:41","modified_gmt":"2009-12-24T08:52:41","slug":"pros-and-cons-of-interest-only-mortgage","status":"publish","type":"post","link":"https:\/\/www.niftylivecharts.com\/blog\/pros-and-cons-of-interest-only-mortgage\/","title":{"rendered":"Pros and Cons of Interest Only Mortgage"},"content":{"rendered":"
Do You Know the Pros and Cons of Interest Only Mortgage?<\/div>\n
Has any lender ever told you the Interest Only Mortgage was like a double-edged sword? It can help you achieve your dream of owning a home more easily, but it also can create a financial hardship for those who don\u2019t fully understand what\u2019s involved.<\/div>\n
In the attempt to lure potential homebuyers, the lenders have come up with various creative mortgage options. One of the more popular offers is the Interest Only Mortgage. As the name implies, with Interest Only Mortgage, the monthly payment will be applied to the interest portion only. In a traditional mortgage option, the monthly payment applies to both interest and principal, even though, in the early years, interest portion is much more than the amount paid to the principal.<\/div>\n
Interest Only Mortgage has become more popular to new homebuyers for the following reasons:<\/div>\n
\u00b7 Since the monthly payment is low, the savings can be used for personal spending, paying off higher interest debts, buying furniture for the new house, or even investing.<\/div>\n
\u00b7 The interest paid to the Interest Only Mortgage is still eligible for tax write-off at the end of the year.<\/div>\n
\u00b7 Some Interest Only Mortgages allow you to make a principal payment during the interest only period. This helps reduce your balance the following month which lowers your payment further.<\/div>\n
However, Interest Only Mortgage is not for everyone.<\/div>\n
\u00b7 Beware a potential prepayment penalty for the first 1-3 years imposed by some lenders.<\/div>\n
\u00b7 You have to play the \u201ccatch up game\u201d once you begin to pay the principal. The amount is much more since you didn\u2019t pay during the interest only payment years.<\/div>\n
\u00b7 Think twice before committing to an Interest Only Mortgage if it\u2019s the only way for you to afford a house.<\/div>\n

As the name implies, with Interest Only Mortgage, the monthly payment will be applied to the interest portion only. In a traditional mortgage option, the monthly payment applies to both interest and principal, even though, in the early years, interest portion is much more than the amount paid to the principal.In the attempt to lure potential homebuyers, the lenders have come up with various creative mortgage options. One of the more popular offers is the Interest Only Mortgage<\/p>\n

Interest Only Mortgage has become more popular to new homebuyers for the following reasons:(Advantages)<\/strong><\/p>\n

\u00b7 Since the monthly payment is low, the savings can be used for personal spending, paying off higher interest debts, buying furniture for the new house, or even investing.<\/p>\n

\u00b7 The interest paid to the Interest Only Mortgage is still eligible for tax write-off at the end of the year.<\/p>\n

\u00b7 Some Interest Only Mortgages allow you to make a principal payment during the interest only period. This helps reduce your balance the following month which lowers your payment further.<\/p>\n

However, Interest Only Mortgage is not for everyone.(Disadvantages)<\/strong><\/p>\n

\u00b7 Beware a potential prepayment penalty for the first 1-3 years imposed by some lenders.<\/p>\n

\u00b7 You have to play the \u201ccatch up game\u201d once you begin to pay the principal. The amount is much more since you didn\u2019t pay during the interest only payment years.<\/p>\n

\u00b7 Think twice before committing to an Interest Only Mortgage if it\u2019s the only way for you to afford a house.<\/p>\n","protected":false},"excerpt":{"rendered":"

Do You Know the Pros and Cons of Interest Only Mortgage? Has any lender ever told you the Interest Only Mortgage was like a double-edged sword? It can help you achieve your dream of owning a home more easily, but it also can create a financial hardship for those who don\u2019t fully understand what\u2019s involved. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[1],"tags":[806,732,3802,4648,2933,4650,1955,4649],"class_list":{"0":"post-1601","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-general","7":"tag-amortization","8":"tag-assets","9":"tag-financial-planning","10":"tag-interest-only-mortgagre","11":"tag-loans","12":"tag-mortgage-broker","13":"tag-mortgage-loan","14":"tag-mpney","15":"entry"},"_links":{"self":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/posts\/1601","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/comments?post=1601"}],"version-history":[{"count":0,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/posts\/1601\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/media?parent=1601"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/categories?post=1601"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/tags?post=1601"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}