Interest Only Loan Rate | Lower Monthly Payments

What Are Interest-Only Loans?

When you take out a traditional loan, the monthly payments that you make go toward both your loan balance and interest costs. If you keep up with interest charges, you will gradually pay down the debt you owe.

An interest-only loan is where your payments only go toward the interest on the loan. None of the money you pay goes toward your overall loan balance or principal. It allows people to have lower monthly due amounts over a fixed period.

You do need to pay the entire loan off, either by making a lump sum payment, or you can increase your monthly payments to include money that will go toward the principal.

How Do Interest-Only Loans Work?

Interest-only loans typically cost less monthly than a traditional loan structure. The payments are less because none of what you pay goes toward paying off the principal on the loan. The loan is not amortized, which means that you do not pay down any of the original loan amount.

The monthly payment for an interest-only loan can be calculated by multiplying the loan amount by the interest rate you receive. Then, you divide that sum by 12 months.

Interest-only loans are not meant to last forever. There are several ways that you can repay them according to the structure of your loan. Some options are:

You can convert to an amortizing loan to begin to pay off the principals
Making a lump sum or balloon payment at the end of the specified loan period
Pay it off by refinancing and getting another loan.

Compare Interest-Only Loans Rates

There are many different types of non-QM loans, one of which is an interest-only loan. What is an interest-only loan? It is a loan where you only have to pay down the interest. Interest-only loan rates are typically a bit higher than your traditional loans. The reason that interest-only loan rates tend to be higher is that they involve more risk. But the higher interest-only loan rates are a great resource to use when a traditional loan will not work for you.

By taking out an interest-only loan, you can purchase the home of your dreams now and then start to pay it down later. It is a good tool to ensure that you don’t miss the opportunity of being a homeowner in the here and now. There will be a time in the future to start to pay down the loan, but an interest-only loan just helps you realize your dream now!

Advantages of Interest-Only Loans

You can purchase more expensive property than you might otherwise be able to.
Costs tend to be lower
It frees up your cash flow

Disadvantages of Interest-Only Loans

Risk of being upside down on your loan.
They are only meant to be temporary
Negative amortization.
No equity.

Testimonials

Testimoial 1

Another couple weeks and we will have been in our new house 1 full year! What a journey – and thanks to you and HomeSpring it didn’t hurt too much, once I found you! Being Self-employed with some “past credit challenges” put me right into your preferred client range. Before you, we went through a multiple-months long, excruciating experience with another lender that didn’t work for us. Once we found you, the approval process was quick and painless! We had Schumacher Homes build our home and they told me your company was the quickest, easiest to work with and most enjoyable lender they have worked with… They’re nationwide and I believe they built about 200 homes in the Lowcountry last year. To underscore your ease of use… we refinanced the house after 6 months with a well-known national bank. What a pain in the butt! Took 3 months, we had to resubmit our financials every month and we had to work hard to get the refinance! Thank God that’s over!! Rest assured I’ll mention Chris Lathbury and HomeSpring Mortgage to anyone I meet who may need you! If you need a reference, feel free to pass on my name and I will sing your praises!! Thanks for all your work and help in making such a potentially stressful process go so well!

Testimonial 2

I want to say thank you to Chris Lathbury and the entire team at HomeSpring Mortgage for being so wonderful and gracious to me during the entire application, underwriting and funding process for the purchase of my home. It didn’t stop there Chris was very active in servicing the loan after funding. Whenever I would reach out with a question or had a concern Chris would always return my email or call within 24 hours max. Thank you from the bottom of my heart for all your help in accommodating the loan process to align with my relocation and new job appointment. It has been a pleasure to work with all of you! I highly recommend Home Spring Mortgage for all your real estate loan needs, you will not regret it.  
Firstly, it is a major task to apply for and be approved for a mortgage and when going through that process you want a mortgage lender that understands your specific needs and how to make that a reality. HomeSpring Mortgage is that company. After dealing with several lenders and their numerous delays I found Chris and HomeSpring. They were professional, communicative, truthful and a company that gets the job done. HomeSpring is the way to go when looking to finance your home. Solutions is what they are about.

Testimonial 3

My clients and I found Chris after another lender let us down. He listened to us, looked over our contract, and even spoke with the seller of the home my client’s were purchasing to help salvage the deal. With an incredibly tight timeline, and tons of emotions, Chris was the true hero in this transaction and made it happen for us. Words truly do not express the level of gratitude I feel for how hard he worked for us. To say he went above and beyond is an understatement. This was my first time working with Chris, and the person who referred me to him told me he has a heart of gold, and he did an outstanding job living up to that reputation. He will be my go-to for these unique financing situations from now on!

Drew K

Hey Norb – We just closed and I just wanted to reach out and sincerely thank you, Chris, and HomeSpring Mortgage for working with us on this. As you can imagine, we’ve had a very difficult time getting back in the good graces of lenders, especially on this scale, and needed a chance, and ya’ll gave us that. We’re excited about being able to do our renovation project now, when only a month or two ago it was looking highly unlikely. Also, I appreciate the timeliness and level of communication that ya’ll showed throughout the whole process, which made everything run smoothly.

Our intentions are to not stick around at the higher rate for the long term, as I’m sure you can understand, when hopefully rates come down at some point and our credit profile should continue to improve. Whenever that time comes, we will most certainly work with y’all again to hopefully capture a lower rate. Thanks again!

Drew K

Interest Only loans

Interest Only Loans

What Are Interest-Only Loans?

How Do Interest-Only Loans Work?

Compare Interest-Only Loans Rates

Advantages of Interest-Only Loans

Disadvantages of Interest-Only Loans

Testimonials

Testimoial 1

Testimonial 2

Testimonial 3

Drew K