-Extremely low payments…
-Interest Only loans are typically Adjustable Rates with fixed terms of 1,3, 5, 7, and 10 years in length.
-Usually the adjustable term matches the interest only term. That means after the fixed period the loan simultaneously becomes adjustable and the payment amortizes with principal and interest.
An Interest only mortgage can be an excellent choice for some borrowers. They are designed to offer the lowest payment possible. Although none of the payment goes toward the principal you still receive the appreciation of your homes value. Many savvy homeowners select this option so they may invest the difference of monthly savings.
Because of the lower payment, the interest only loan may mean that you can buy more home than with a fully amortizing mortgage. Of course, you may make additional payments toward your principal balance at any time.
The reduction on monthly bills with the option of reducing your principal owed when the financial means are available is a very powerful option.
*Interest only loans can be risky.
Michael Ayoub, Author NMLS ID 6631