McDowell Mountain Ranch Arizona Real Estate - Helene Cass, Realtor

Financing Your Purchase > Types of Mortgages > Interest only Loans

30 Year Fixed Rate
15 Year Fixed Rate
Adjustable Rate Loans
Interest Only Loans
FHA Loans
VA Loans

"Landlords grow rich in their sleep."

- John Stuart Mill

Interest Only Loans:

The term "Interest Only" is a slight misnomer. During the life of the loan, your payments will be applied towards the interest accrued by the loan amount. The upside of this is that you will have a lower monthly payment and can usually take out a loan for a larger amount. The potential downside is that you are not paying off the principal of the loan and if the value of the home decreases, you are still responsible for the principal on the mortgage.

Hypothetical Home Cost: $400,000
Down payment: $80,000
Mortgage Amount: $320,000
Interest Only – 30 year fixed 7.375% = $1,966.67
Interest Only – 3/1 ARM 6.875%= $1,556.67

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