Today, when you apply for a loan, you have more choices than ever before.
Interest-Only Mortgages: Your monthly mortgage payment only covers the interest you owe on the loan for the first 5 to 10 years, and you pay nothing to reduce the total amount you borrowed(principal). After the interest-only period, you start paying higher monthly payments that cover both the interest and principal that must be repaid over the remaining term of the loan.
Negative Amortization Mortgages: Your monthly payment is less than the amount of interest you owe on the loan. The unpaid interest gets added to the loan’s principal amount, causing the total amount you owe to increase each month instead of getting smaller.
Option Payment ARM Mortgages: You have the option to make different types of monthly payments with this mortgage. For example, you have the option to pay:
- A minimum payment that is less than the amount needed to cover the interest and increases the total amount of your loan
- An interest only payment
- Payments calculated to pay off the loan in 30 yrs
Posted In Real Estate
This entry was posted on Saturday, February 17th, 2007 at 10:54 am and is filed under Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.