What happens to interest only mortgage after introductory period ends?

Question

What happens in an interest only mortgage after the introductory period ends allowing you to pay int only?
Do the monthly pymts double or does it take many extra years to pay off?

I dont have this type of mortg loan.
im just considering it since I cant afford full amount on a mortg over $400,000

I also dont own any home yet

Answer 1

You will need to read your loan document. More likely you will need to start paying principal, which could make your payment increase. Also you have to make sure your interest rate stays the same. If not, it could go up to the level you can't afford.

Answer 2

the loan is re-casted on the unpaid balance. If you have never put $$$ to the principal amount owed and just paid interest only then take the time left to pay the note off and work the rate with what time is left and you will get your answer. For example a 30 year note with a 10 year interest only payment @6% on 100k loan --after the first 10 years with no $$ to principal you still owe 100K so your payments look like this $100,000 @ 6% x240 payments = $716.43 payment of principal and interest and of course all other impounds for taxes, insurance and pmi.

Answer 3

Repayments will increase to ensure that they continue to pay off the interest, and also start to erode the capital sum owed as well, so that the loan is paid off at the end of the term of the loan. This will mean higher payments, but they will not double.

If you have one of these loans, go to your lender and ask them for a projection of the repayments.

Answer 4

Call and ask them. Now would be a good time to look at refinancing if it works for you, interest rates are down some and you may have built up some equity depending on how long you've lived there.

Answer 5

If youre using the savings from your interest only loan to put food on the table STOP. Buy a cheaper hosue. start in a condo or soemthing. ESPECIALLY if its adjustable. please. PLEASE