Interest only loans – Good and bad.
Good – you can finally purchase a home.
Bad – when rates rise in 1,3,5,7 or 10 years – you very well may not be able to afford your new payments.
Choose wisely, says the Realestatejournal
“Gimmick or not, this zero-percent financing loan, and traditional interest-only loans in general, can be flexible debt-management tools for homeowners who use them wisely. But if interest rates continue to rise, as anticipated by the Federal Reserve, consumers may find that they’re taking on far more risk than they can stomach.Generally, these loans best serve borrowers who can afford the risk of a fluctuating interest rates and who live in regions where homes are likely to significantly appreciate in value over the next several years. Interest-only loans are not good for consumers who will find themselves in a financial pinch should their mortgage payments rise sharply, or who want to take a conservative approach and pay down their mortgage debt. Here I’ll walk you through some of the pros and cons of interest-only loans.”
Interested in Learning More?
Jim Duncan has been helping buyers and sellers in Charlottesville’s neighborhoods for 25 years. Get local insight born of experience.
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