2006-10-17 14:47:36 · 7 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
It depends upon the loan. Interest only Hybrid ARMs are usually interest only for the fixed rate period, then begin amortizing afterwards. Fixed rate mortgages are most often interest only for five years, although there are some threes out there, after which point they begin to amortize.
Nobody nobody nobody has an interest only loan at a reasonable rate of interest that stays interest only for the entire term. Most of the ones who have claimed they did in the past are in prison now, and they few who aren't are simply the ones who have completed their sentences.
2006-10-17 17:03:45 · answer #1 · answered by Searchlight Crusade 5 · 0⤊ 1⤋
In that kind of arrangement, you should be able to pay down some of the principal at anytime without penalty. Unfortunately, pre-payment penalties are built into these kind of loans.
I had an Interest only loan and I told my broker from the onset - NO PREPAYMENT PENALTIES. He was happy to oblige and I was a happy customer. My friend was not so lucky and she's now a month behind on her mortgage - I foresee a trip to the courthouse down the road....
Your mortgage broker will be celebrating his trip to Aruba rather than supporting you at the foreclosure sale. The advertising poster beneath me is correct in saying that some mortgages are interest only for a set period of time and then they become conventional mortgages. The interest rate will rise because these mortgages are adjustable rate mortgages.
2006-10-17 22:13:01 · answer #2 · answered by Anonymous · 0⤊ 1⤋
Look at the terms of the loan. There MUST be a date when the note must be repaid. As stated by the other answers, it usually must be paid in full by the due date as stated in the terms agreement. If not, they lender might add on any and all accrued interest. It is hard to give advice when I don't know all the terms of agreement. Find out the details and follow them to avoid any penalties. good luck.
2006-10-17 21:59:05 · answer #3 · answered by davebarrca 4 · 0⤊ 1⤋
It depends on how long the period of interest only is fixed for. 5 years, 10 years.... Regardless, during that interest only period you can still make principal payments.
2006-10-18 13:44:46 · answer #4 · answered by Anonymous · 0⤊ 1⤋
unless you understand every single line in that entire contract, DO NOT get a loan like that.
If you need a loan like that for lower payments, it might be wiser to live within your means and get a smaller house.
2006-10-17 21:56:02 · answer #5 · answered by Anonymous · 1⤊ 1⤋
At the end of the term which could be a looong time.
OR
When you can get a better interest rate somewhere else.
Keep Smiling!
PS: Stay free of debt if you can.
2006-10-17 21:50:30 · answer #6 · answered by Smilin' Fred 4 · 0⤊ 1⤋
When the term ends and your note balloons. These loans are extremely dangerous and most, let me repeat, MOST of them end up in foreclosure.
2006-10-17 21:51:39 · answer #7 · answered by Mark P. 5 · 2⤊ 1⤋