Interest Only Loans

We have been getting our clients involved in

interest only

(payment option) loans since the beginning of time! These loans can be terrific for the RIGHT people and, quite frankly, a disaster for some. But for many borrowers, this is a new era of loan products.

Recently, the mortgage industry (and the borrowers it serves) have become CRAZY about "interest only" loans. Why all the hype? Because this is the first time in lending history that the industry has created NEW loan programs with lower payments to accommodate every borrower's needs! Almost ALL loan programs now have an option of paying just the monthly interest expense on the mortgage, but no principal reduction. This means LOWER payments across the entire spectrum of loan programs, good credit or bad credit. How do these loans really work?

Traditional mortgages have always had an "amortization schedule" which allows for an end to the mortgage - a maturity date. These loans mature (payoff) as the principal is paid down to zero, one payment at a time. If you eliminate the principal component of the loan payment, the amount of the payment is lower. In a very low interest rate environment, say rates between 4%-6%, the payment is much lower. The lower the interest rate, the larger the difference between the traditional principal & interest payment (P&I) and the NEW "interest only" (just I) payment. Logically, as the interest expense on any loan moves towards zero (no interest payment at all), the bigger the spread becomes between an interest only payment and a traditional payment that addresses actually paying the loan down. What does this mean for you?

It means you have more choices, and my job as your representative is to develop a wide range of choices then guide you to the loan program that meets your needs most appropriately. With the wide range of NEW programs allowing just interest only payments, my job has grown that much more fulfilling! We have been guiding hundreds of borrowers to much lower payment choices than would have been available in years past. Since late 2003, we have been creating interest only loan solutions for credit challenged borrowers with credit scores as low as 560! We have also been applying these programs to borrowers who can't document income and need 100% financing to purchase or refinance. Even thirty year fixed rates now allow for these lower payment plans. Non-owner occupied loans are available. Revolving home equity lines of credit have also been a popular interest only loan. ALL of these programs are new! Finally, the "payment option" program that provides three payment choices each month and allows for deferred interest, has always been popular with folks who want the very lowest mortgage payment available.

Interest only loan programs may or may not be the best choice for you. The only way to make an informed decision regarding their benefits is to contact me at One Touch Lending, so I can develop a menu of available programs for your specific situation. Call me now at (800) 883-1278 x495 and let's see what we can do!