Refinancing: Interest Only Loans Help You to Breathe Easier After a Refinance

If you are considering refinancing your mortgage, it may be appealing to consider an interest only loan, which will provide you with lower payments for a time period following the refinancing. Interest only loans involve a lower monthly payment up-front for a specific time period, freeing up funds you can use for immediate needs.

Once the initial time period for the interest only loan payment is over, your monthly payment will increase and at that time you will begin to pay down the original amount you borrowed. It is important to understand that the payment will increase in the future to cover the interest and principal, so you can be financially prepared for the larger monthly payment.

An interest only loan may be a good option for refinancing if you:

• •Have a fluctuating income and can expect a significant increase in income before the interest-only period is over.
• •Expect to sell the home before the interest-only period is over.