Interest Only

Interest only loan programs provide the same features as fixed and variable rate programs, and they additionally offer a lower payment option. With an interest only loan payment option, you pay only the interest portion of the payment but no principal.

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Disadvantages

Interest Only Programs

Several payment options
Lower monthly payments
Option to pay the full principal and interest payment
Interest only payments for up to ten years
Great to use for a financial planning/savings tool

Higher rates
Principal loan balance will not decrease during the interest only payment period
Payment will be higher for the remaining term after initial 10 years

An interest only loan can be more expensive compared to a fully amortized loan. Many lenders add a fee of one-quarter point for the interest only option.

An interest only loan will allow you to save and invest the money you would have been paying toward the principal balance. A properly implemented plan can allow you to accumulate enough money to payoff the entire mortgage balance in half the time.

An interest only loan gives you a lower monthly payment while also increasing your tax deductions, thereby increasing your monthly cash in two ways.

Interest only loans are amazing wealth creating tools if used properly. However, for the un-disciplined person who will not properly save and invest the monthly savings generated, it may not be a wise choice.

Primary Residential Mortgage, Inc. - 1497 Chain Bridge Road Suite 104 - McLean, VA 22101
Office Phone: 703-752-6700 EFax: 202-298-9346
Email: cquinn@primeres.com

VA License #MLB-794 North Carolina License #L-112833-163

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Interest Only