There are several options when it comes to mortgage products. These can include traditional types of fixed loans, typically for 15 to 30 years, as well as ARM or adjustable rate mortgages (ARM).
There are also interest only mortgages, which are somewhat similar in the way they work as to an ARM. In an interest only mortgage the first 5 to 7 years of the loan the buyer pays only on the interest. After this term, the buyer then pays an increased monthly mortgage amount for the balance of the loan.
Better Rates
For many buyers, the best interest only mortgage rates help to keep those initial few years of the loan at a very low payment. This can allow a buyer meeting the mortgage qualifications to actually increase the amount of home that is purchased without having to worry about high monthly mortgage payments.
It is important when considering the best interest only mortgage rates to also think about the structure of the loan. If the period after the interest only payments are fixed, it is easier to budget regardless of the change in the market. With an ARM type of loan, it is more challenging as interest rates can change dramatically over the initial 5 to 7 years, often resulting in an upward adjustment that may be difficult to meet.
Ideal for Sellers
Buying a larger home or a home in a better neighborhood with the best interest only mortgage rates is also a great idea for those living in a home for a short period of time. By keeping the mortgage low with the interest only payments, the homeowner can save the balance, allowing for a larger down payment on the next home purchased.
These types of loans, particularly with low interest rates, also work to the buyer’s advantage when higher rates are provided for investments. The buyer can invest the monthly principal payment, earning money and using that to make a lump sum payment or address higher monthly mortgage rates in the future.
Let the experts at Guaranteed Rate assist in finding the best interest only mortgage rates to meet your home buying needs
