Primary Residential Mortgage, Inc.
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Interest only Louisiana mortgage is a type of mortgage where the only amount that needs to be paid off are the interests. These interest rates will be based on the total amount that was borrowed. Because it’s only the interest that is being paid off, the remaining interest throughout the mortgage term will be the same. However, this type of mortgage has an indefinite end, which means that the borrower will still need to pay off the principal balance of the loan later on.
This can be extremely beneficial for first- time homeowners in New Orleans Louisiana since it allows the borrower to temporarily focus on lesser payments until their income has grown.
The borrowers have several options once they’re almost done with paying the interest- only mortgage term. They can either renew the interest- only house loan or continuing the payment by getting a normal mortgage and liquidating their investment.
The rates on mortgages like interest- only loans can vary every month. There’s also a chance that the same rate may continue for the next 10 years. This is very advantageous for people whose income most likely to fluctuate every month. This is also very suitable for people who wants to have a short- term loan to build their credit. This is easier to pay since it’s smaller than regular mortgage payments. You can even use the money to invest into some something that has a higher revenue. Also, if you’re actually renovating a house or building a home, you can use the extra funds coming from the savings that you have for the interest- only loan.
However, one of its biggest downfalls is that you’re not really building up your equity since you’re not really paying anything off your house. This means that you can’t really borrow anything against it.
Interest rates are also higher if compared to standard fixed rate mortgage. Also, since it’s not really fixed, your payments will increase as soon as the interest rates go up. These types of loan are only considered as a short- term and usually lasts for only 5 years so you can’t really use a full 25- year house loan term.
Although interest- only house loan is a great option, especially in states like Louisiana, it’s usually not advisable to get this type of loan if you’re only doing it because you have too many bills or if you’re applying for a mortgage that’s too much for your savings.
This type of option is a popular choice for people who are still building up their credit. Although it may not help them build their equity, but if they can afford to pay it on time, then they can slowly rebuild their credit.<< Back to the list.