Interest Only
Interest Only is an option that can be beneficial to
some borrowers. This program is designed to offer the
lowest payment possible, as borrower is not paying
anything towards the principal in the monthly payment. A
borrower with limited budget will find this option very
helpful. The borrower may make additional payments
toward principal at any time. The complete loan term is
usually for 30 years, and this program is offered for
first 10 years. After that, payment is adjusted to
include principal and interest for the remaining of the
loan term. This ensures that borrower will pay off the
loan by the end of the required loan term. Consider this
program as a short-term solution that enables borrower
to maximize borrowing capacity with the lowest monthly
payment possible.
An example of Interest Only Option:
Loan Amount: 500,000
Interest Rate: 5.75%
Term: 30 Yrs.
Monthly payment (Principal + Interest) = $2917.86
Interest Only Payment = $2395.83
Total Monthly Savings = $522.03
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