What Is So Good About Interest Only Home Mortgage Loans?

Interest only home mortgage loans are a fairly easy concept to get a grasp on

. They are something that would help many people get into and/or stay in their homes because it does represent an upfront savings and it allows you a little breathing room to better plan your future!

In its simplistic basics, the interest only mortgage loans that are offered by many of the mortgage companies and even some banks are set up to require you to pay only the interest on your loan, none of the principal, each month. This will have the effect of reducing what you pay each month that can be used for other commitments or can be saved to earn a little bit more interest for later use. You can make additional payments, in any month, that will apply to the principal, which will have the effect of reducing the amount of interest you owe!

There are many financial consultants that will tell you that interest only home mortgage loans are the way to go! They mention all of the above benefits and add a few of their own. They will point out that "owning the dwelling is more important that the extra money you spend on it each month". This needs to be considered in its entirety.

The issue is that after the time that is set for the interest only home mortgage loans' term, the payments must then be taken up and you could be in default if you are not able to take them over and keep up with them. You need to decide how focused you are on debt reduction, and what priority it needs to take in the overall scheme of things.

So, let us line out a few advantages and disadvantages of interest only home mortgage loans:

This is the perfect type of loan for someone who knows they are going to be coming into a lot of money before the interest only term is up.

This is a type of loan that makes a lot of sense if you are trying to purchase a very costly house and you need to reduce the payments as much as possible. This is the primary use for this type of loan.

This will certainly reduce your monthly payments. It will allow you to bank the difference and earn some interest or put it to work earning other capital for you; however, the proper steps need to be followed at the proper time. The financial difficulties that have befallen millions of people over the last several years, in the USA, shows that consideration of anything other than a straight mortgage must be monitored and undertaken very carefully.

This is not the right type of product to have if your home loses its complete value. At that point, it becomes a permanent load of debt on your back and that is where many people find themselves in the last several years of home purchases, placing them in a position that is called "upside down". This is not a very pleasant place to find yourself in at all!

Again, careful consideration of all of your options with a competent financial planner will indicate whether the lines of interest only home mortgage loans is something that will assist or hurt you.

And, one final point; always get proper financial and legal advice when purchasing real estate, or signing any legally binding contract. Doing that could save you money and avoid potential problems if your financial circumstances change in the future.

by: Mike S Williams

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