Interest-Only Home Loans are Back by Stanley Homes, Premier Home Builder of Brevard & Volusia County

by / Wednesday, 14 January 2015 / Published in Latest Blog Entries - Stanley Homes Inc.
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interest-onlyA recent article, posted on the Florida Realtors website, sparked our interest here at Stanley Homes, Premier Custom Builder of Brevard & Volusia County and we wanted to share the good news with you!

With the market returning back to where it was years ago, the popularity of Interest Only Loan opportunities has grown, CEO and publisher of Inside Mortgage Finance, Guy Cecala, summed up to the Wall Street Journal. The product has changed some, alleviating industry fears.

In 2014 mortgage rates were at an all time low and with the anticipation of a rise this year, landlords are expected to increase rent which will make Interest Only Loans a more attainable option for future homebuyers.

The ability to make monthly interest payments but pay nothing toward the principal for a set period of time allows borrowers to invest, what would be used towards the principal, in higher yield investments, sell property, and even balance out their seasonal incomes if necessary. Not only would the borrower be able to reallocate their finances but they could buy a more expensive home with a smaller monthly payment and use that time to pay more into a retirement account, for example.  When their finances are tight, they can make the Interest Only Loan payment, and when they are flush they can make a substantial payment to principal.

On most Interest Only Loans, whether fixed or adjustable rate, the monthly mortgage payment will decline in the month following an extra payment. This is the only type of mortgage that has this feature. On a conventional FRM, the payment never changes while on ARMs, the payment doesn’t change until the next rate adjustment.

Some borrowers find this feature extremely convenient. For example, a homebuyer who must close before his existing house is sold may want to use the proceeds of the sale to reduce the payment on the new mortgage. On many, but not all Interest Only Loans, a large extra payment reduces the payment in the following month.

So what are you waiting for?

 

East Coast, FL Home Builder Stanley Homes – Jason Stanley, OWNER Stanley Homes is one of the areas fastest growing new home builders. We specialize in affordable custom homes on the East Coast of Florida in areas including Melbourne, Fl., New Smyrna Beach, Fl., Suntree, Fl., Viera, Fl., Rockledge, Fl., Malabar, Fl., Titusville, Fl.,  and throughout Brevard & Volusia County, Fl. Call us 321-684-7761

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