QandAs: Loans

What is a 30-Year Interest Only Loan?

Answer:
Interest only home loans are popular because they give

homeowners the flexibility to make interest only payments, which lowers their monthly obligation. A 30-year interest only loan is a great choice for borrowers who want to keep their monthly payments low for the first three, five, seven, ten, or fifteen years.

With a 30-year interest only loan, borrowers can choose a fixed rate or adjustable rate loan. Fixed rates are less risky. In this case, the rate obtained at the outset of the loan will remain the same for the entire term. Once borrowers begin repayment of interest and principle, their mortgage payment amount will adjust and the loan becomes fully amortized.


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