With most home loans, your monthly mortgage payment will include principal and interest. An interest-only loan is different because you will pay only the interest on your mortgage for a set amount of time, usually five to 10 years. During this time, the principal will remain unchanged.
This type of loan can allow you to buy a home that is more expensive than you could otherwise afford with a standard loan.
While this loan option can make sense for some borrowers, it is not for everyone. Interest-only loans do not amortize, so you will quickly find yourself underwater if home prices drop. You can guard against this by putting down a large down payment for instant equity.
The monthly mortgage payments can also rise a great deal after the interest-only period ends, so you will need to be sure you can afford larger payments that include principal. Remember that you may find it impossible to refinance your loan later if home prices do not rise and you lack equity.
Interest-only home loans became very popular during the height of the housing bubble, and they are still popular today among well-qualified buyers. Before you apply for an interest-only loan, it is important to understand how new mortgage rules that went into effect in January 2014 impact this loan option. Interest-only mortgages are excluded from Qualified Mortgage status, which is designed to protect lenders against liability if borrowers default. This means you will only get approved for the loan if you are very well qualified with substantial assets and a significant down payment.
Mortgage Investors Group, based in Tennessee, offers residential financing in a number of states in the southeast, See MIG Service Areas. Terms and conditions to apply to home financing. We want to share with you the loan terms vary based on several characteristics and your financial profile. These include but are not limited to loan program, loan purpose, occupancy, credit history, credit score, assets, and other criteria per loan type. The repayment terms and interest rate may vary from time to time. The terms represented here are based on certain assumptions outlined below and/or noted on the loan outline page. Additional details concerning privacy, program disclosures, licensing specifics may be found at migonline.com Legal Information.
MIG Loan Officers will help gather the information needed for an individual assessment to provide home financing which matches the loan characteristics with your home financing needs based on your financial profile, when you are ready to begin a full loan application. For estimates and general information before that step, the basis for which the mortgage financing information are as follows:An MIG Loan Officer is available to help with your financial details to determine which characteristics apply to your situation for a personalized look into which loan program best fits your home financing needs. Please use the Find a Loan Officer link or reach out to Mortgage Investors Group at 800-489-8910. Equal Housing Lender 1.2020