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Home_Mortgage_Loans_For_People_With_Bad_Credit_-_Pro_s_And_Con_s_Of_Interest-Only_Loans

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									Title:
Home Mortgage Loans For People With Bad Credit - Pro's And Con's Of Interest-Only Loans


Word Count:
383


Summary:
Buying a home with poor credit is just as easy as buying a home with perfect credit. Years ago, many people
with a low credit rating believed homeownership was unattainable. Fortunately, there are various loan
programs designed to help people with low income, bad credit, and no down payment purchase a house.
Included among these programs are interest-only loans.


What are Interest-Only Mortgage Loans?


Interest-only mortgage loans became popular in the early 2000's. The c...



Keywords:
interest-only mortgage loan, bad credit



Article Body:
Buying a home with poor credit is just as easy as buying a home with perfect credit. Years ago, many people
with a low credit rating believed homeownership was unattainable. Fortunately, there are various loan
programs designed to help people with low income, bad credit, and no down payment purchase a house.
Included among these programs are interest-only loans.


What are Interest-Only Mortgage Loans?


Interest-only mortgage loans became popular in the early 2000's. The concept of interest-only loans is very
unique. Ordinarily, monthly mortgage payments consist of a portion of the payment being applied to the
principal balance, and a portion applied to the interest. In order to payoff a mortgage in 15 or 30 years, a
specific amount of money must be paid each month.


On the other hand, if you obtain an interest-only mortgage loan, you pay only the interest for the first few
years. Interest-only periods vary. Homeowners may opt for a three, five, seven, or ten year interest-only
loan. After the interest-only period ends, the homeowner must begin making payments toward the principal
and interest.


Why is an Interest-Only Loan Beneficial?
If you live in a booming housing market, an interest-only loan may be your only option for buying a home.
Many are attracted to these loans because the initial mortgage payments are low. For example, a $200,000
conventional loan has a monthly payment of about $1200. With an interest-only loan, the mortgage would
be about $800 a month. Hence, if you are buying in an overpriced market, affordable living is within reach.


Pitfall of an Interest-Only Loan


Once the interest-only period ends, you still owe the original loan amount. When homeowners begin making
payments towards the interest and principal balance, mortgage payments may increase 40%. Most
homeowners are unable to afford a mortgage increase. If you plan on living in your home for several years,
an interest-only loan may not be a good option. On the other hand, if you earn a sizeable income and can
afford a higher mortgage, you may benefit from this type of loan.


Another option involves selling your home before the interest-only period ends. If home values in your area
have increased significantly, you may capitalize from the equity. However, if the housing market takes a
nosedive and home values decline, you may be unable to sell your home.




Credit Dispute Letter

								
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