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One of the most popular refinance loan options offered by banks these days are the ‘interest-only' loans. Interest only loans are just as they sound, you make payments only towards the interest each month, while your principle balance remains the same. There are upsides and downsides to refinancing home loans with an interest only option. Here are a few of each.
First, if you are only paying on your interest, obviously you will be required to pay less each month. Now, you still will always have the option to pay towards your principle, however, being required to pay less can come in handy. On the other hand, most people who choose refinancing home loans with an interest only option find themselves never making those extra payments and never lowering their balance.
If the housing market takes a downturn, they could be in trouble. Speak with a mortgage broker or a professional representative of a brokerage. They can present you with refinancing options for your home loan based on your specific case and needs. The right refinancing home loan is out there for you, and it may include the interest only option. Hopefully, you are a little more knowledgeable than before you read this.
|Jennifer Mathes, Ph.D.|