Are you trying to improve the immediate cash flow of either your budget or an investment property? An Interest Only Loan simply pays the interest-there is no principal reduction being made. Normally, this will allow you purchase up to 20% more home or property. This allows you to possibly get the home you desire today and not have to move prematurely because you've outgrown your home.
There are risks with Interest only loans. Make sure you are comfortable with a future increase in the loan payment when it switches from interest only to fully amortizing. This will increase the payment. If you can't make the new payment you may be forced to refinance or sell the home-assuming these options are available to you.
The implications of an interest only loan needs to be fully understood BEFORE a this type of loan is obtained. Many interest only loans remain as such for a period of 5-10 years before they require principal to be paid and the loan to convert to an amortizing loan. If your projected holding period matches the interest only time period, you might want to consider this loan. Also, if you believe that your income will increase enough in the future to offset any increase in the payment, this loan may be right for you.
Consider the following:
Only interest in deductible via your 1098 at tax time. Principal reduction can be looked at as an after tax dollar that goes towards forced savings. Interest only loans maximizes your tax deduction.
Your payment will be less than an amortizing loan which will help the immediate budget.
Your purchasing power will be increased with an interest only payment-you may be able to buy a larger home that fits both current and future needs.
You may be able to grow into a payment and get the property you really want today.
These loans have been used by investors who wanted to reducing their carrying costs during their projected holding period, thereby improving cash flow-positive or negative.
Use our mortgage calculators and see the payment differentials for yourself. Consider both the benefits and risks of these types of loans.
Call us to check availabilty of this type of loan. Investors purchase loans based on their level of risk tolerance and previous loan performance. The marketplace waxes and wanes in their desire for interest only mortgages. Sometimes we can offer them but the pricing doesn't make them advantageous to the borrower. As your Minnesota mortgage broker, we welcome your phone call to discuss your loan scenario. We offer a complete line of mortgage products and programs for homeowners and investors throughout Minnesota.
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Disclaimer:
John Mazzara is a licensed Realtor and is affiliated with RE/MAX Associates Plus in Edina, Minnesota.
Each RE/MAX office is independently owned and operated. John has sold homes since 1986 in Edina and
throughout the entire Minneapolis/St. Paul Metro area. We have a lot of relocation resources for
relocating to MN. Search for Minnesota Homes via our online MLS search at
http://www.minneapolisstpaulhomes.com or by phone at 952-929-2577.
This Website-www.mninterestonly.com is owned and operated by Venture Development-a
Minnesota Mortgage broker providing mortgage loan financing. We are a private
company and not a government agency or the federal government.
John Mazzara is a licensed Realtor and is affiliated with RE/MAX Associates Plus in Edina,
Minnesota. John has sold homes since 1986 in Edina and throughout the entire
Minneapolis/St. Paul Metro area. We have a lot of relocation resources for relocating to MN.
Search for Minnesota Homes via our online MLS search at
http://www.minneapolisstpaulhomes.com/ or
by phone at 952-929-2577.
