Do You Know the Pros and Cons of Interest Only Mortgage?

By Marie-Claire Ng

Has any lender ever told you the Interest Only Mortgage was like a double-edged sword? It can help you achieve your dream of owning a home more easily, but it also can create a financial hardship for those who don’t fully understand what’s involved.

Interest Only Mortgage has become more popular to new homebuyers for the following reasons:

• Since the monthly payment is low, the savings can be used for personal spending, paying off higher interest debts, buying furniture for the new house, or even investing.
• The interest paid to the Interest Only Mortgage is still eligible for tax write-off at the end of the year.
• Some Interest Only Mortgages allow you to make a principal payment during the interest only period. This helps reduce your balance the following month which lowers your payment further.

However, Interest Only Mortgage is not for everyone.

• Beware a potential prepayment penalty for the first 1-3 years imposed by some lenders.
• You have to play the “catch up game” once you begin to pay the principal. The amount is much more since you didn’t pay during the interest only payment years.
• Think twice before committing to an Interest Only Mortgage if it’s the only way for you to afford a house.

For More Information:

How to pay off mortgage in 10 years or less and build lots of equity from your home? Visit www.1a-refinance-home.com. Marie-Claire Ng may be contacted at dtt@mcvt-groups.com.