I'm not interested in getting one, but I've come across that saying a few times and I can't figure it out. I mean, if you're only paying the interest, when do you ever pay the principal?
2007-06-26 01:58:22 · 5 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
Thanks Pepsi - Do you pay the principal at the end in FULL? Or in multiple payments?
2007-06-26 02:03:01 · update #1
Interest only simply means that you are not paying down the principal amount, only the interest. Most interest only loans have a limited term and either revert to normal principla + interest loan or have a balloon payment due at the end of the interest only term.
2007-06-26 02:05:17 · answer #1 · answered by Bostonian In MO 7 · 1⤊ 1⤋
You pay the principal at the end of the term of the loan. If it's a 10 year interest only loan, than you would pay the principal at the end of the 10 years, if a 20 year loan, than at the end of 20 years.
2007-06-26 02:01:54 · answer #2 · answered by Anonymous · 1⤊ 0⤋
If you are referring to an interest only mortgage, use caution. At some point in the life of the loan, principal WILL kick in, and you will feel like you have been run over by a busload of elephants at that time.
Assume you get interest only for ten years out of a thirty year contract. As soon as year eleven rolls around, you will be expected to start retiring the principal amount along with interest, and then you have but twenty years, instead of thirty, to make that principal retirement.
2007-06-26 02:03:39 · answer #3 · answered by acermill 7 · 2⤊ 1⤋
Interest Only = scam.
You only pay enough each month to pay only the interest on the loan, leaving the principal untouched.
Bascially, the banker becomes your landlord, you pay only rent, but you're on the hook for the loss should the house ever go down in value.
2007-06-26 02:22:03 · answer #4 · answered by Anonymous · 1⤊ 1⤋
I work for a mortgage company and we do not do these type of "scam" loans. They are basically a way to put people in more of a house than they can afford because you are only paying the interest for a while, eventually reality sets in though. This is why our country is in the state it is in. People are getting in deep debt to be able to have more than they can afford to pay for. Foreclosure rates are at an all time high. It's no wonder when you have interest only and 50 year mortgages..
2007-06-26 02:08:39 · answer #5 · answered by Life is Crazy, so am I 3 · 1⤊ 1⤋