1) Having a lower monthly payment each month is perfect for people who own multi-family homes, i.e. 2, 3 or 4-family homes. If you are paying less OUT of your pocket each month, the rental income means MORE in your pocket each month! This is known as increasing you ROI (return on investment)
2) The national standard of house value appreciation is around 10%. Locally, in the NY metropolitan area including Westchester, NYC, Long Island, Rockland, Putnam, Dutchess and Fairfield counties are experiencing unprecedented rates of return on home value: 20 to 30% or more per year! Paying monthly on a 30 year fixed for a home that just goes up and up in value is tying up your disposable income. That is, what money do you actually have left after you have paid yoru mortgage and other bills?
3) Interest only loans increase your disposable income!
Sometimes it's not the rate that matters; it's your monthly mortgage payment. Keep your hands on your money
4) You are buying your first home. You have pretty good credit, but the payments are simply scary even with the most competitive rates. Consider this: an Interest Only Loan REDUCES a typical $360,000 mortgage payment from $2,158.38 to $1,800.00. That amount to $358.38 savings per month and $4300 per year! Instead of handing over $358.38 per month to a lending institution, you can USE YOUR MONEY THE WAY YOU WANT.
5) Put your savings into an interest-bearing account; buy a CD, fund your IRA, increase contributions on a 529B from $50 per month to $150 per month! (talk to a trusted accountant or financial advisor for advice)
6) Pay down the principal. Ok, so you are hooked on the idea of being free and clear on your home or investment property. So send the savings as principal payments--but talk to our loan consultants first--a Pay Option Arm might be a better way to go OR a recasting loan would be best. Reducing your principal balance is not the basic concept of Interest Only loans. Many of our clients come to us by referral. They typically ASK for Interest-Only loans. Why? Simple. Savvy home owners and buyers know that the value of their home goes up. Period. Statistically, home owners refinance or sell within 5 years. They know the answer is not a "regular 30 year fixed".
Paying down the principal will deplete your cash-on-hand, but see how this changes the amortization schedule of your loan on our Interest Only Mortgage Payment Calculator
7) Another reason clients choose the interest only loan is so that they can afford the payments during their first year of home ownership and then refinance after their house goes up in value. Many use the extra money to do home improvements, increasing the value of the house even more!
8) You have no money to put down on a home. You need 100% financing. Interest only loans are perfect for you! Obviously your other obligations have impeded on the down payment you anticipated making.
Why not take advantage of the lowest possible monthly payment?
When deciding what type of loan is best for you, it is important to consider how you will use the money and how you intend to pay it off. Do you want a fixed interest rate so you can repay your loan in precise monthly installments or would you rather have the flexibility to make any size payment above the interest-only minimum?
In today’s competitive market, there are many options available. my123 Mortgage Home Loan Specialists are standing by to help you make an educated decision. Our job is to help you find the right mortgage product for your lifestyle and financial needs.
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