Understanding interest-only mortgages

An interest-only mortgage requires scheduled interest payments without scheduled principal repayment for a specified period. These payments do not reduce the loan balance unless you make additional principal payments.

When principal repayment begins, the payment can increase substantially. An adjustable rate can create additional payment changes. Read the loan terms, repayment schedule, interest-rate provisions and any balloon or prepayment terms carefully.

Do not assume you will qualify based only on the initial payment or that you will be able to refinance before the payment changes. Compare future affordability and the full cost with a fully amortizing loan.

Compare mortgage programs or discuss specialty financing with Team Windes. Availability and eligibility vary by lender.

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