QandAs: Loans

What is a 3 Year Interest Only Loan?

Answer:
A 3-year interest only home loan is a smart choice

for borrowers who want to temporarily lower their monthly payments. With this loan, homeowners enjoy a low fixed rate for a three year period. In addition, borrowers have the option of making interest only payments for the initial three years of the loan.

Although borrowers aren’t required to make payments toward the principal balance, they can add an extra payment anytime throughout the three years, which will reduce the principal. This loan option is perfect for homebuyers who need a low payment in order to qualify for a particular home. However, since payments will adjust in three years, persons who choose this loan option should anticipate higher payments in the future.


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