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Here are some hints regarding
current mortgage rates in nj buyer of second mortgages
What Is An Interest Only Mortgage, And Should I Get One?
There is a non-traditional type of home mortgage loan being marketed to consumers known as an interest only home mortgage loan. Sometimes called a balloon mortgage, an interest only mortgage is exactly what the name implies. For the term of the mortgage, the borrower is paying only the interest that is due on the home mortgage loan and is not paying anything back towards the original loan amount.
At the end of the mortgage term, the balance due on the loan will be equal to the full amount that was originally borrowed. This balance will be due, in full, when the mortgage loan term ends.
Why an Interest Only Mortgage Loan Sounds Attractive
Obviously, we would all like our monthly mortgage payments to be as low as possible. With an interest only home mortgage loan, the borrower is keeping his monthly payments to a minimal by paying only the interest that was accrued on the loan in the last thirty days since his last payment. Therefore, this type of mortgage is often marketed to the consumer as a tool which allows the borrower to buy more of a home than they would be able to afford with a traditional home mortgage loan.
To illustrate this lets take a look at the purchase of a $150,000 home. Buying this home with a traditional 30 year fixed rate mortgage with a seven percent interest rate would give you monthly mortgage payments of approximately $1,000. On the other hand, if the consumer chooses an interest only 30 year fixed rate mortgage at the same seven percent interest rate, monthly mortgage payments would only be $695. This type of mortgage would be attractive to the consumer who can afford $700 each month, but can not afford $1,000.
For the most part; however, financial advisors will tell you it is best not to choose this type of loan except in rare circumstances. It is generally accepted that an interest only home mortgage loan is an alright choice if you dont intend to hold the loan for more than a year or two and you are being offered a great interest rate.
Why An Interest Only Mortgage Is Not A Good Idea
In general, its best not to choose an interest only option for your home mortgage loan. Why? The largest problem with this type of financing is that the home owner is not building any equity into his home with an interest only mortgage. The home will still be considered fully financed even after the mortgage term comes to an end.
There are also other reasons that an interest only mortgage is not usually your best choice.
If you buy the home during a high market and the value of the house drops or remains the same during the term of the mortgage, it is possible that even after selling the home, you will still have money unpaid from your interest only mortgage.
Furthermore, if the homeowner does not wish to sell the home at the end of the mortgage term, then he will have to have another plan in place for paying off the balance of the mortgage due.
As you can see, there are times when this type of loan would be wisesuch as in investment propertiesbut if you are buying a home and planning on living in it for some time, its probably not the loan for you!
About the Author
This article provided courtesy of http://www.business-loans-guide.com
More Useful Resource and Updates on current mortgage rates in nj buyer of second mortgages
- Banks that pocket rate cuts face tougher action (Independent)
Gordon Brown urged the banks to pass on the full benefit of yesterday's surprise 1.5 per cent cut in interest rates to mortgage-holders and small businesses. His call came as Labour MPs called for legislation to force banks to lower their mortgage rates in line with rate reductions by the Bank of England to ensure that the impact of the downturn is softened and people who need it most get help.
- What rate cuts mean for you (Independent)
The Bank of England cut interest rates to their lowest level in more than 50 years this week ? in a bid to stop Britain slipping into a deep and lengthy recession. For anyone lucky enough to have a tracker mortgage, this was great news ? as their monthly mortgage payments will now drop by tens or even hundreds of pounds next month.
- Shoring up your mortgage (The Charlotte Observer)
(By Christina Rexrode, crexrode@charlotteobserver.com) The latest trend in the housing downturn is finding ways to help struggling homeowners make their mortgage payments. The government, banks, housing counselors and other observers are all weighing in with plans for mortgage modifications, also called loan workouts. Three major programs unfurled last month by the Federal Housing ...
- It's time to think about refinancing that high-rate mortgage (The Record)
Many Americans affected by the economic crisis want their unaffordable mortgages reworked through special programs for people facing foreclosure. But you don't have to be in financial trouble to benefit from mortgage refinance, real estate experts say.
- How the interest rate cut could affect us (icWales)
Nigel John, managing director of Hern & Crabtree estate and letting agents, based in Cardiff, said: ?The rate cut could be amazing news for the housing market as long as the mortgage lenders pass on the reduction in the cost of borrowing.
- How Will The Rate Cut Affect Your Mortgage? (The Motley Fool)
What does the cut mean for borrowers and what?s going on with trackers?
- Jobless rate jumps to highest since '94 (Denver Post)
The nation's unemployment rate bolted to a 14-year high of 6.5 percent in October as another 240,000 jobs were cut, far worse than economists expected and stark proof the economy is deteriorating at an alarmingly rapid pace.
- Perpetual reopens income/mortgage funds (The West Australian)
Fund manager Perpetual Ltd has re-opened applications for its income and mortgage funds at the request of a number of clients.
- (AFX UK Focus) 2008-11-05 21:35 US mortgage rates fell on Wednesday - BestInfo (Interactive Investor)
NEW YORK, Nov 5 (Reuters) - The average rate on a 30-year U.S. mortgage with no upfront points fell 1/8 of a percentage point on Wednesday to 6 percent, according to BestInfo Inc. If the mortgage market on Thursday continues in its current direction, rates may remain the same. The 30-year mortgage rate with one upfront point fell 1/8 of a percentage point to 5-3/4 percent. The 30-year mortgage ...
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