What Is An Interest Only Refinance Loan?
An Interest Only refinance loan, allows homeowners to refinance their home mortgage into a new mortgage loan, where they do not pay any principal on their loan – just interest. For example, if you own a home worth $ 250,000 and you currently pay $ 1500 per month, an interest only refinance loan may reduce your monthly mortgage payment from $ 1500 to $ 1000 – a savings of $ 500 per month. If you've had a life event such as a new baby, divorce, death in the family or simply need to cut costs – interest only loan can be extremely advantageous.
Interest only loans, like other exotic types of loans, have their purpose. They have their advantages and disadvantages. There is no doubt that you've heard of the disadvantages from media coverage in the past 2 years. However, as with all things, there are situations where interest only loans make sense.
If you live in the Washington DC Metro around (District of Columbia, Maryland or Northern Virginia), there is a good chance that you have equity in your home. If you are thinking about refinancing your mortgage loan as an interest only refinance loan – the most important factor to consider is how long you will stay in your home.
Interest only refinance loans make sense for people, who do not plan to stay in their homes for a long period of time. For example, if you are thinking about relocating to another state or country – you may find it beneficial to pay as little to your mortgage loan company as possible.
In essence, you get all the benefits of homeownership, without the high price tag. In addition, since homes appreciate fairly well in the Washington DC area, there is a good chance that your home will still appreciate by the time that you decide to move on.