Florida Interest Only Mortgage
Interest only mortgage loans have gain popularity the last few years because of the increase in housing, especially in most of Florida. An interest only
mortgage allows the borrower to only have to repay the interest for a specific period of time; typically between 5 to 10 years. After the initial period, the payment can quickly jump to sometimes double the original mortgage payment.
An interest only mortgage can help reduce the monthly mortgage payment from unaffordability to affordability. For example, for a 30 year loan of $200,000 at 6.5%, an interest only mortgage payment would be $1,083. For the same loan that includes both principal and interest, the mortgage payment would be $1,264. As you can see, an interest only payment saves you a few hundred on a $200,000 loan.
Drawbacks of Interest Only Mortgage
The interest only mortgage does not allow you to pay down the principal owed on the loan. This can be a problem for people who live in areas where home values do not appreciate much and decide to move within the first few years. Sometimes the borrower may need to pay the mortgage company additional sums of money even after the home is sold just to be able to move out.
Another common issue with interest only mortgage in Florida is that a low of borrowers are just not aware of how interest only loans work and get shocked when the payments double. These borrowers sometimes are forced to foreclose on their homes.
If you are interested in a Florida interest only mortgage, fill out our quote form and we can have a few mortgage companies contact you to explain the risks and benefits of the interest only mortgage.