Interest-only mortgage loans are like regular home loans but instead of paying monthly principal and interest on the loan, only the interest is paid. This usually, but not always, continues through the period for which the loan is fixed. Just as interest only loans largely went away after the great depression, so too are they largely going away after this great recession. Nonetheless, they still exist in the jumbo and super jumbo markets.
● Disciplined investors who are confident that principal payments, ordinarily paid on a standard principle and interest loan, are instead invested in a stock instruments that will make money
● People whose income takes the form of infrequent bonuses or commission
● Investors that are less concerned with principal balance reduction than they are with cash flow
Interest only loans are not right for everyone and iLoan offers fully amortizing ARM’s and fixed rate jumbo loans as well. Payment shock and long term affordability must be carefully considered when taking an interest only mortgage.