2006-08-09 22:32:55 · 4 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
The Interest Only loan program Option are not rip-offs, they are designed for very specific needs. Although, that is not to say they haven't been used or abused in scenarios that were not well thought out; but I don't see that as a problem with the loan itself, rather the education of the borrower or lack of educating by the lender / broker in my honest opinion anyway.
Also a 15 or 30 year fixed rate doesn't fit everyones needs, so it's not a 'blanket' solution to just 'jump all over'.
Now, as far as do ALL I/O loans have a balloon payment...
No, not all of them do, it really depends on the structure of the loan. You could have a 30 year fixed I/O loan, where the introductory I/O payments are made during the first ten years, and then the payments recast to a full P&I payment based upon the current balance and are spread out over the reamining term of the loan.
If you are in a program that has a balloon payment, this means one of two things, either you should be expecting to refinance your loan(s) before the end of that period, or you should have the liquid assets to repay the remainder of the loan.
I hope that answered your question!
The
2006-08-10 02:48:03 · answer #1 · answered by ReggieWjr1 4 · 2⤊ 0⤋
all interest only loans have what is called an interest only period and a repayment period. what does this mean for you If during your interest only period you only pay the minimum payment you will have the full principal balance to pay amortized over either 25 or 20 years these loans are based on a 30 amortization always when a 1st mortgage. If it is a heloc then the I/O period will be referred to as a draw period, at the end of the draw period it will amortize over any where from 10 to 20 years. If you are doing what is called a 30 due in 15 2nd mortgage you will have a balloon payment and may have a brief I/O period. Do not be fearful of a balloon payment you will most likely move or refinance prior to that payment coming due!!
2006-08-10 10:19:08 · answer #2 · answered by jen 1 · 0⤊ 0⤋
I would assume so since you are only paying the principal. How else would you ever pay it off?
I pray that you are not thinking about one of these rip-off interest only loans. Do the smart thing and get a 15 or 30 year conventional.
2006-08-10 05:41:08 · answer #3 · answered by N3WJL 5 · 0⤊ 1⤋
If you don't pay the principal, it will always be outstanding at the end of the loan period.
2006-08-10 05:39:03 · answer #4 · answered by dryheatdave 6 · 0⤊ 1⤋