5-1 ARM (IO) - Interest OnlyAn interest-only 5/1 ARM or adjustable rate mortgage is an excellent option if you need a low rate mortgage with minimal monthly payments. For the first five years of the loan, you’ll enjoy a below-market interest rate with substantial savings. Unfortunately, the monthly payments you make during the initial 5 year period won’t bring down the principle of the loan at all. These payments will only affect the final interest of the loan. As a result, you’ll likely end up paying more money over the course of the loan in total interest with an interest-only 5/1 ARM (IO). But this mortgage can help you get into your home much faster and cheaper, if you qualify. An interest only loan may be difficult to pay off, but if you’re smart about it, you can use it to your advantage. If you know that your income will increase in a short time, you may be able to use an interest only loan to purchase your home at low cost and then pay your mortgage off just as fast once your income improves. Make sure there is no early repayment penalty tied to your mortgage. |
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