Article: Interest Only Loans ? What You Need To Know?
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Interest Only Loans ? What You Need To Know?
If you are shopping for a house or refinancing, you?ve probably seen ads for interest-only loans. While this type of loan is beneficial for some homebuyers, other homebuyers might regret the decision to take out an interest-only loan.
Interest-only (IO) loans are structured so that the borrower pays the interest every month. The borrower is not required to pay on the principal balance, although the borrower does have that option.
Usually, this option to pay interest only lasts for a limited period of time, typically between 5 and 10 years.
This type of loan can benefit borrowers who have fluctuating incomes, or who expect to see an increase in their income sometime in the near future. Because the borrower has the option of paying on the principa...
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