The Basics Of Interest Only Loans
REM #F680
By Ilyce R. Glink
Summary: A home buyer is considering
an interest only loan. Ilyce explains that these types of loans are best if
you are trying to conserve cash.
Q: I am thinking about getting an interest-only mortgage for $320,000. It would have an interest-only period of 5 years and then convert into a 25-year loan.
Is this type of loan a good choice for me? How do you feel about interest-only
loans?
A: I like interest only mortgages in several situations. They work for me if
you're trying to conserve the cash you have on hand for a home improvement project,
or some other expense, or if you're buying a real estate investment property
and want to hold down your out-of-pocket expenses.
What worries me is when someone gets an interest-only loan simply because it
allows them to buy more property than they otherwise would be able to afford.
I've got lots of stories on my website about interest-only loans. You may want
to check them out.
NOTE: This column is distributed by Real Estate Matters Syndicate, PO Box 366, Glencoe, Illinois, 60022. This column may not be resold, reprinted, resyndicated or redistributed without written permission from the publisher.
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