An interest only mortgage product provides a lower monthly payment during a set number of years at the start of the loan, while only interest is repaid. Following this initial period of interest-only payments, the loan payment increases to include principal payments as well. An interest-only loan may be either a fixed-rate or ARM product. An interest-only ARM option provides a lower interest rate up-front, and will adjust to current market conditions at the end of the interest-only period.

• If you know your future financial situation will support higher loan payments, an interest-only loan can help you get into a house sooner than you would otherwise be able to.
• If you have substantial equity in your home and would like to use money that would otherwise be applied to a principal payment in other investments, an interest-only loan may be a good option.

• Your payments may increase significantly following the end of the interest-only period. It is important that you consider whether you will be able to afford those higher payments.
• During the interest-only period, you are not building equity in your home through your mortgage payments. You can only build equity during this time if the value of your home appreciates. It is also possible for the value of your home to depreciate if market conditions are unfavorable, thus you could owe more on your loan than your home is worth.

Contact us for more information about Interest Only loans.