After understanding how an interest-only mortgage loan works, the next question I usually receive from a potential client is "would an interest-only mortgage make sense for me?"
The main benefit of an interest-only mortgage loan is a lower monthly payment than a traditional mortgage that requires a principal and interest payment.
Another benefit of an interest-only loan is its flexibility. The borrower has the flexibility of paying interest-only, or they can add principal to the interest payment when they want to and in any amount.
People that have income that can vary from month to month would benefit from the lower monthly payment and the flexibility to pay principal when they want to and in what amount they choose.
Are you self-employed? Paid commission or a bonus? If you answered yes to any of these questions, an interest-only mortgage might make sense for you because of the reasons described above!
Another reason an interest-only loan might make sense for you is because you may have a more important use for the money than paying principal.
Here are some examples of what may be a more important use of the money:
- Paying off consumer debt, such as credit cards or car loans
- Saving for retirement
- Saving for the education of your children
- Paying for higher education for your children
- Saving the money for a financial emergency
- Paying for a life insurance policy to protect your family financially
- Setting aside funds for health and medical expenses
For more information on any mortgage related questions I can be reached at (650) 222-0386, or you can e-mail me at pcaulfield@absolutemortgage.com.
