Interest Only
Interest only loan programs provide the same features as fixed and variable rate programs, and they additionally offer a lower payment option. With an interest only loan payment option, you pay only the interest portion of the payment but no principal.
California Home Loan Tip: When trying to decide if you should obtain an interest only payment option on your next home loan, decide what your short term and long term goals are for the property. Having a clear understanding of what you wish to accomplish with the property is an important factor when deciding if you should obtain an interest only California home loan.
| Interest Only Programs |
- Several payment options
- Lower monthly payments
- Qualify for a higher loan amount
- Qualify at the interest only payment
- Option to pay the full principal and interest payment
- Interest only payments for up to ten years
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- Higher rates
- Principal loan balance will not decrease during the interest only payment period
- Payment will be higher for the remaining term
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An interest only loan can be more expensive compared to a fully amortized loan. Many lenders add a fee of one-quarter point for the interest only option.
Interest only payment options allow you to qualify at the starting interest only payment. This gives you more buying power and a lower monthly payment compared to an amortized loan.
You pay interest based on your principal balance. On an interest only loan, your principal balance does not decrease, therefore, you pay more interest with this option.
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