The Latest Info On Interest Only Mortgage Calculators

Lenders say they have seen an increase in this type of loan. In fact, for some lenders, as many as one out of seven of the loans processed are interest-only versions. But the disadvantage to this type of loan is that, once it's time to begin paying the principal, you'll have to make up lost ground. In the end, your payments will be quite a bit higher than they would have been if you'd been paying on the principal all along.

An interest only mortgage calculator can be quite helpful in determining whether an interest-only product is right for you. Once you've seen the math, you'll be in a better position to make a decision. Thanks to the internet, such calculators are now available online. You just punch in some pertinent numbers and you'll get a quick idea of what your monthly payment is likely to be. In fact, the best calculators are now often offered online.

You should be aware of the fact that interest-only loans come in a variety of forms. In some cases, you'll face a fixed interest rate until the loan is paid off, while others offer a fixed rate for a period of years, followed by a variable rate which may change every six months to a year.

By far the most common type of interest-only loan is similar to a five-year adjustable rate mortgage except that you pay no principal for the initial five years. A quick calculation shows that a $200,000 interest-only loan with a 4.75 percent rate would mean monthly payments of less than $800--$250 less a month than you would find with a traditional loan.

Still, an interest only loan carries with it a great deal of risk. With such a loan, you are unable to build equity, which means that your house could end up costing you more than it's worth. However, if you invest the money that you would otherwise pay toward the principal, an interest-only loan may be to your advantage.