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Mortgage interestInterest Only Calculator is the original resource for information on interest only loans mortgages in the nation. First-time homebuyers, seasoned real estate investors mortgage professionals use our site daily to find information on topics such as interest-only mortgage programs, the LIBOR Rate, the Prime Rate, the COFI Index, Option Arm Loans more. You can view common interest-only mortgage guidelines, find interest-only mortgage lenders, calculate interest only mortgage payments, understand the benefits risks interest-only loans have over traditional fixed rates and even view the current Fannie Mae loan limits for conforming, jumbo super jumbo mortgage loans.

An interest only loan does not mean you will never pay principal on a home loan. These mortgage programs simply have what’s known as an interest-only payment option attached to the note. In all cases the note will state how long your interest-only payments will last. Let’s use a 5 year interest-only loan for example. On a typical 5 year fixed rate under an interest-only program the interest rate is fixed for the first five (5) years of the loan term and your only obligation are interest-only payments during this term. During the beginning of the 6th year (month 61) the unpaid balance is fully amortized over the remaining term and the borrower is now obligated to make principal and interest payments to the lender. Think of it as taking a 25 year mortgage (principal interest payments) on an adjustable rate note tied to the then current interest rates.

LIBOR (an abbreviation for London Interbank Offered Rate ) is the interest rate offered by a specific group of London banks for U.S. dollar deposits of a stated maturity. The majority of interest-only loan programs are tied to the LIBOR index rate although some lenders use the CMT (treasury) and COFI indexes.

No, not for everybody. Interest-only loans are generally not long term loan programs. However interest only loans can provide a great option for many homebuyers such as:

Consumers who do not wish to tie up the equity in their home and would prefer to invest the money into markets of better return.

Consumers who are sure their income will grow but would like greater purchasing power today. For example, young lawyers doctors

Consumers who know the time frame for home ownership and are more concerned with lower payments than building equity.

Consumers purchasing investment property find interest only loans very valuable in areas where real estate appreciation is high.

This is not to say that an interest-only loan may not be right for you but every program has a certain profile of consumers that tend to show the majority of interest. If you think an interest-only loan can benefit your life it would be a good idea to contact a mortgage lender consult with your financial advisor to make the best decision for you and your family

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