Interested In an Interest Only Loan
You have finally found the property you've always wanted. The contract
has been signed and you are now in the manner of finding exactly how
you will be living and paying off the property for the next few years.
Your lender may have already contacted you and given you the options.
When the question comes up of what kind of loan you want, be prepared
for the answer that will benefit you the most.
One of the main types of loans that you may be offered is an interest
only loan. This loan is wonderful for some that are getting involved
in a home, but for others may not be as beneficial. This loan works by
you first paying off the bank interest that is added as a percentage
to your loan. After the interest is completely paid off, then you
start paying off the house itself.
If you are looking at an interest only loan, you will want to confirm
that the regular interest rates at the time are in the lower
percentage. Interest only loans will have two types of interest rates
that may be applied. The first is a fixed interest rate, which will
mean that the percentage you pay will stay the same the entire time
that you have the loan. The second will be a variable interest, where
it will fluctuate according to the economy. This type of interest rate
is good if you want to pay higher or lower amounts at different times,
but not good if your pay check doesn't have the same flexibility.
The interest that you get with an interest only loan will be settled
by the lender and how they decide to set up your loan. It may also be
determined by the amount of the down payment that you make and
specific rules that are set to the loan. Before signing the papers,
make sure that you know how all of these apply and what it means.
If you want to confirm that you get the best deal, then it will be
important to know what the individual rules are. By doing this, you
can ensure that your payments are beneficial to you as well as
everyone else. One place to investigate is with the possibilities of
an interest only loan.
ABOUT THE AUTHOR
Bob Schwartz, is a Certified Residential
Specialist, CA licensed real estate broker with
www.Brokerforyou.com. Bob
has over 27 years of residential real estate experience, authored a
number of published articles and served as an expert witness for
San Diego lawyers. You can contact
Bob via e-mail at bob@brokerforyou.com or visit his highly popular
San Diego real estate website at:
http://www.brokerforyou.com
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