Christian Interest Only Mortgage Loan
Unlike most home financing, a Christian interest only mortgage loan gives borrowers the option of not paying principal amounts until after a specific period, usually the first five to ten years. A typical fixed or adjustable rate mortgage is financed by multiplying the cost of the house by the interest rate, or finance charge, over the term of the loan, usually fifteen, twenty, thirty, or forty years. Mortgage payments reflect the computed principal and interest, or P&I. Lenders apply a borrower's monthly payment to both the outstanding principal, the amount of money financed, and to the interest, the amount charged to carry the loan. By applying payments to both principal and interest, both parts of the mortgage are gradually reduced month by month. However, with an interest only mortgage loan, only the finance charge is reduced for the first 60 to 120 months, while the principal balance remains the same. However, at the end of the interest-only term, P&I payments become due and the entire balance reduces each month as notes are paid.
First-time home buyers, investors, and those on a fluctuating income may all benefit from delaying principal mortgage payments, especially in a lagging economy. For buyers just trying to get into their first home, the savings realized by delaying principal payments can be sufficient to put some cash back into a tight budget. Coming up with a down payment, closing costs, appraisals and attorneys fees can be an expensive undertaking; not to mention moving expenses, furnishings, and utility deposits. An interest only mortgage loan can help first-time buyers get established in a new residence while getting accustomed to the cost of home ownership versus renting. Money saved can be applied to home repairs, lawn maintenance, homeowners' insurance, or unexpected expenses, such as replacing a furnace or installing new flooring. Salespersons, self-employed entrepreneurs, or home-based business people can take advantage of principal-free financing when fluctuating incomes are on the slim side. Mortgages provide the option of paying only on the finance charges during months when money is tight. Seasonal workers have a choice of making regular principal and interest payments when jobs are plentiful or switching to interest-only payments during leaner periods. This kind of flexible financing can actually give borrowers better leverage when it comes to personal money management. "He becometh poor that dealeth with a slack hand: but the hand of the diligent maketh rich" (Proverbs 10:4).
Investors who don't plan on staying in a home for more than five years can also take advantage of an interest only mortgage loan. Savvy money managers can theoretically purchase a fixer-upper with this kind of flexible financing, make improvements to the property, and sell at a profit. Some states prohibit investors from "flipping" a house without occupying the property for less than six months. But five- to ten-year interest-only mortgages provide ample time for investors to rehabilitate, occupy, market, and sell a home for a substantial profit. Since principal balances remain the same, investor profit margins will depend on the sale price of renovated properties, less the cost of making improvements. Properties requiring mostly cosmetic and not structural renovations could wind up being gold mines for wise borrowers. Homeowners seeking to refinance and save may want to look at a principal-free mortgage as a way to get out of a high-interest fixed or adjustable rate contract. While the cost of initial financing may be slightly higher, the benefits of lowering monthly payments may be well worth refinancing in the long run.
The downside to an interest only mortgage loan is primarily the fact that principal balances do not decrease during the term borrowers are paying solely on finance charges. Mortgages with unpaid principles provide homeowners no equity until P&I payments resume. Owners can only realize a profit if the home appraises and sells for a price above the remaining balance. But in a housing market slump, property values are on the decline, and sellers may have to take a loss. Another disadvantage is that homeowners accustomed to making lower monthly payments for several years may not be able to keep up with heftier P&I notes, which may increase by two to three hundred dollars. That doesn't sound like much, but borrowers may have incurred additional expenses in the interim. A growing family's budget may not be able to withstand an increase of $200 per month without making major sacrifices. An adjustable rate interest only mortgage loan may require even greater payments at the end of the term.
Borrowers seeking to locate sources for an interest only mortgage loan can surf the Web or visit with local bankers and lending institutions. Many web-based lenders offer information on several types of mortgages and terms to help borrowers make the wisest decisions. Buyers should pay close attention to question and answer website pages where many personal concerns have already been addressed. And doing a little homework before approaching an online or local lender is just part of the financing process. A good credit rating is essential for any type of financing, along with proof of employment, residency, and income. Borrowers should be prepared to offer banking statements, federal and state income tax returns, and a listing of current creditors and unpaid installment balances. Online lenders usually provide applications and instruments to pre-qualify and assess a borrower's creditworthiness before completing the preliminary process. First-time home buyers and investors should carefully review terms and payment options for an interest only mortgage loan before committing to a long-term financial arrangement. Borrowers should also watch out for adjustable rate mortgages that tack on hefty interest rates, and make sure that they can manage higher payments a few years down the road. The potential savings of principal-free financing can be a boon to residential and commercial buyers with careful financial planning and an accurate picture of future fiscal obligations.
Christian Interest Only Home MortgagesAn interest only home mortgage is becoming a very attractive option to many homebuyers looking for deals in the loan market. These types of mortgages allow consumers to take out home loans and pay only the interest on it for a period of time. Homeowners eventually pay on the principle, and generally, the interest rate will gently begin to climb with the market, once the interest-only period has expired. This can be a great option for anyone who has an employment opportunity that grows over time, such as a sales position, allowing the payment to be larger later in the life of the loan.
Consumers will find that interest only home mortgages will allow them to pay only the interest on the first five to fifteen years of a home loan. As rates rise with the changes in the economy, homebuyers consider these kinds of loans very attractive, because they are getting more house for lower monthly payments, at least in the beginning. Principles do not go away, however, and will eventually need to be paid for. As consumers should be aware of, their interest rate will increase over time with an interest only home mortgage. Therefore, once the principal is attached to the house note, the monthly payment can greatly increase. The lower payment in the beginning can be a great savings, and work for those who want to invest money or are planning to have an increase in salary within the life of the home loan.
The Internet can give a consumer more information, as well as a variety of potential lenders and mortgage companies. There are different types of loans available to homebuyers today, aside from the interest only home mortgage, and research on the Internet can reveal options for anyone wanting to buy a home. Caution is advised when considering interest only home mortgages due to the potentially high payments that will eventually come. Those interested in this type of loan should seek wise financial counsel before committing to any offer they receive from a mortgage company.
The Bible says to seek counsel in everything. Finding the right loan for a family can be confusing, and though interest only home mortgages appear to be an initial savings, those considering one should seek advice from trusted loved ones and experts in the financial fields. "Where no counsel is, the people fall; but in the multitude of counsellors there is safety." (Proverbs 11:14)
Interest only mortgages offer consumers the opportunity to make payments, that fit their budgets, through choosing how much to pay and paying the full principle off at any point in time, with no penalty. This may be the avenue an individual should choose to advance investment opportunities. Or an interest only mortgage could help the consumer expand the amount they can borrow for a new home. Used judiciously, this type of loan program can help secure a positive financial future. This type of mortgage can give a person the most options for their monthly repayment schedule. With a fixed-rate mortgage, the individual must pay a fixed amount each month. This provides a repayment plan on just the interest of a combination of interest and principle. The decision of how much to pay each month is up to the individual.
The advantage of this service is that the monthly payment is lower than with other types of mortgages. The disadvantage is that the consumer may end up not paying on the principle and therefore can get into financial difficulties when selling the property. Most interest only mortgages allow for the principle to be paid at any point in time with no penalties. This gives a good option for those who want to invest in real estate by buying and reselling within a short period of time. The payment may be up to 45 percent less with an interest only mortgage loan.
The decision to choose this loan over other programs may be difficult. If someone does not want to put the majority of their money into the house payment, they might opt for an interest only mortgage. If there is a desire to pay off the home loan sooner than the terms set, it is important to check into interest only mortgages. There are many other financial situations that would call for choosing this type of loan. It is up to the consumer to become thoroughly educated on each loan type in order to choose the program or service that best suits their personal needs.
Interest only mortgages are ARMs, adjustable rate mortgages. That means that the rate on the loan will fluctuate with the federal Prime Rate. A Christian consumer could see the rates go up or down depending on the changes to the Prime Rate. Normally, the term will begin with a fixed rate period, after which the rate will be adjusted every six months. For some loans, the rates could change daily, so the consumer must check out the terms before signing and committing to an agreement. Applying for an interest only mortgage means that the individual is taking risks because there is no fixed rate to depend on. Knowing the risks and being prepared for the best and worst is important. "Take therefore no thought for the morrow: for the morrow shall take thought for the things of itself" (Matthew 6:34). Worrying about what might happen in the future is not something many people want to take on, so this may not be the best type of loan to pursue.