Welcome to Easy Mortgage Online Guide
California Home Mortgage Article
This is a selection made from among articles on California Home Mortgage. For a permanent link to this article, or to bookmark it for future reading, click here.
What Is An Interest Only Mortgage, And Should I Get One?
from: Shaan RandowThere is a non-traditional type of home mortgage loan being marketed to consumers known as an interest only home mortgage loan. Sometimes called a balloon mortgage, an interest only mortgage is exactly what the name implies. For the term of the mortgage, the borrower is paying only the interest that is due on the home mortgage loan and is not paying anything back towards the original loan amount.
At the end of the mortgage term, the balance due on the loan will be equal to the full amount that was originally borrowed. This balance will be due, in full, when the mortgage loan term ends.
Why an Interest Only Mortgage Loan Sounds Attractive
Obviously, we would all like our monthly mortgage payments to be as low as possible. With an interest only home mortgage loan, the borrower is keeping his monthly payments to a minimal by paying only the interest that was accrued on the loan in the last thirty days since his last payment. Therefore, this type of mortgage is often marketed to the consumer as a tool which allows the borrower to “buy more of a home” than they would be able to afford with a traditional home mortgage loan.
To illustrate this let’s take a look at the purchase of a $150,000 home. Buying this home with a traditional 30 year fixed rate mortgage with a seven percent interest rate would give you monthly mortgage payments of approximately $1,000. On the other hand, if the consumer chooses an interest only 30 year fixed rate mortgage at the same seven percent interest rate, monthly mortgage payments would only be $695. This type of mortgage would be attractive to the consumer who can afford $700 each month, but can not afford $1,000.
For the most part; however, financial advisors will tell you it is best not to choose this type of loan except in rare circumstances. It is generally accepted that an interest only home mortgage loan is an alright choice if you don’t intend to hold the loan for more than a year or two and you are being offered a great interest rate.
Why An Interest Only Mortgage Is Not A Good Idea
In general, it’s best not to choose an interest only option for your home mortgage loan. Why? The largest problem with this type of financing is that the home owner is not building any equity into his home with an interest only mortgage. The home will still be considered “fully financed” even after the mortgage term comes to an end.
There are also other reasons that an interest only mortgage is not usually your best choice.
If you buy the home during a high market and the value of the house drops or remains the same during the term of the mortgage, it is possible that even after selling the home, you will still have money unpaid from your interest only mortgage.
Furthermore, if the homeowner does not wish to sell the home at the end of the mortgage term, then he will have to have another plan in place for paying off the balance of the mortgage due.
As you can see, there are times when this type of loan would be wise—such as in investment properties—but if you are buying a home and planning on living in it for some time, it’s probably not the loan for you!
About the Author
This article provided courtesy of http://www.business-loans-guide.com
 |
 |
Warning: file(http://www.searchfeed.com/rd/feed/TextFeed.jsp?trackID=J4200085324&pID=67483&cat=california+home+mortgage&nl=5&page=1&excID=) [function.file]: failed to open stream: HTTP request failed! HTTP/1.1 404 Not Found
in /home/quies/public_html/mortgage/datas/searchfeed.php on line 8
California Home Mortgage Specific links
California Home Mortgage News
Mortgage Deal Reached In 2008 Shows Pitfalls To Avoid In Current Settlement - Huffington Post
 PW-Philadelphia Weekly | Mortgage Deal Reached In 2008 Shows Pitfalls To Avoid In Current Settlement Huffington Post The bank agreed to provide up to $8.4 billion in assistance to 400000 borrowers struggling to keep their homes, but as of October 2011, only $237 million has been paid out. Given the Countrywide settlement's underperformance, some states are hesitant ... Finally, A Foreclosure Settlement (Maybe) |
Palm Springs area business briefs for Sunday, Feb. 5 - The Desert Sun
Palm Springs area business briefs for Sunday, Feb. 5 The Desert Sun COACHELLA VALLEY — Wells Fargo & Co. will host a free home mortgage workshop for about 16000 home mortgage customers from Riverside and San Bernardino counties and surrounding areas from 9 am to 7 pm Feb. 14-15 at the Ontario Convention Center, ... |
California's Solo Mortgage Probe Complicated by 2008 Deal - BusinessWeek
California's Solo Mortgage Probe Complicated by 2008 Deal BusinessWeek 6 deadline to join a proposed multistate agreement over foreclosure practices said to be worth as much as $25 billion if California joins, Harris has said she won't sign onto a deal blocking her from investigating whether the five largest US mortgage ... |
Obama should take cue from California's congressional Demos on housing crisis - San Jose Mercury News
 Fox News | Obama should take cue from California's congressional Demos on housing crisis San Jose Mercury News While only one in 579 homes nationally is "under water," with resale value deflated below the balance of its mortgage loan, that figure is one in every 211 here. In some California counties, the scene is exponentially worse: Fully 51 percent of ... Corker Obama s Principal Write-down Proposal for Underwater Home Mortgages is ... Marine Fights Freddie Mac to Save His Home Freddie Mac Halts Use of Derivatives Tied to High Interest Rates |
CEO, Garret Puckett, Proudly Announces the Recently Launched VA Loan Websites ... - San Francisco Chronicle (press release)
CEO, Garret Puckett, Proudly Announces the Recently Launched VA Loan Websites ... San Francisco Chronicle (press release) Garret Puckett, the CEO of Security America Mortgage, Inc. Proudly Announced the New Release of VA Loan State Specific Websites for Veterans Purchasing a Home in North Carolina, Texas, Florida, Louisiana, Colorado, California, Arkansas, and Oklahoma! |