Interest Only Loan
If you are a student and looking to take out some
student loans, it is a good idea to look into all of
your options.
Refinancing is one thing that you can
examine when you are preparing to pay for student loans.
Refinancing from a traditional home loan to an
interest-only loan has become common because it will
give you control over your cash flow. With an
interest-only loan, in months when you need more cash,
you do not have to pay principal and interest.
Refinancing to an interest-only loan is a good choice
for anyone looking to make their money work harder.
Interest-only loan gives you the option of paying just
the interest or paying interest and as much principal as
you want in any given month. The interest only option is
available in the initial years of the loan for a fixed
number of years. After the interest-only period, all
payments will then include principal and interest.
Interest-only loans can be either traditional fixed-rate
or adjustable-rate mortgages.
Quicken Loans offers
interest-only refinance options that are interest-only
for the first ten years.
If you choose to make the interest-only payment one
month, that month's payment is lower than it would be
had you made the principal and interest payment. Your
interest rate may or may not be lower than a traditional
mortgage, but you will have the option of choosing your
payment. Sophisticated homeowners know that having this
type of payment flexibility is one of the smartest ways
to manage your personal finances.
It is a good idea to consider that there are other
things you can do with the extra cash you can have every
month. These include as paying down high-interest credit
card debt, saving for your children's
college tuition,
buying or lease a second family vehicle, increasing your
home's value by making home improvements and setting
aside money for a rainy day. Depending on your existing
loan balance, refinancing to an interest-only loan could
get you access to thousands of dollars over the course
of several years to put to use as you think best.
Interest-only refinancing may also be a good option for
people who expect move again before the end of the
interest-only period of their home loan.
One mistake that several people make about interest-only
mortgage refinancing is that if you are not paying down
your loan's principal every month, you are not building
home equity, however, it is only applicable under some
circumstances. Homes in the U.S. have been appreciating
between five and six percent a year. Chances are that
even if you are not paying down principal, appreciation
is building equity in your home for you. You should also
know that with any Quicken Loans interest-only loan,
there are never any pre-payment penalties. In addition,
you can refinance again at any time if mortgage rates or
your financial situation changes. Whatever decision you
make, it is a good idea to look into all of your options
and make an educated decision, thus saving you money and
hassle.