What? Interest Only Loans Are Back!

Just when you thought the mortgage environment was safe….Oh NO! According to USA Today Interest Only loans are back!  This can be seen as both a good and bad thing. The fact that Interest Only loans are being offered means that the higher ups in the lending world think that the real estate market will stay flat or go up. The fact that banks are betting on that reminds me of 2006, that makes my insides flip and that’s not good.

What’s an interest only loan you ask? I’ll tell you…An Interest Only loan is a type of balloon loan. Each month you are only required to pay the interest on your loan, not the Principal & Interest. Why is this scary to me? If you only pay the interest, you will not be paying down the principal of the loan. So, in 10 years you will still owe the exact same amount as when you started. Most of the Interest Only loans require that the interest start being paid in five or ten years. That means a big payment increase for you; OUCH! Or possibly your entire loan coming due; OUCH OUCH! Be extremely careful and consider all your other options if you are considering this type of loan.

Is there a benefit to an Interest Only loan? Yes, when you pay over the interest required any principal is applied to your loan balance and the loan is recast. What does that mean? The extra you pay towards your principal is applied to the outstanding balance and your new payment reflects the updated balance. If you are disciplined and want to pay down your mortgage faster, an Interest Only loan may help you achieve that goal. An interest only loan can also be beneficial to those of you on commission. If you can pay your Interest Only payment with your draw or base and when you get your commission or bonus and you put that towards your loan balance that may also benefit you in paying off your loan quicker.

Keep in mind that this type of loan is not for everyone and you need to clearly understand what you’re getting into with this type of loan product.

For more information on loan types, check out my #1 Best Selling book on Amazon.

For more mortgage tips check out our website www.bestmortgagebook.info

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Common Questions Asked By First Time Home Buyers

Wow!  What a ride!  I cannot thank you enough for your support. My book launched on Friday and became the #1 New Release in Mortgage Books on Amazon. Amazon likes it so much they just reduced the paperback price to $8.99!  Grab your copy here: www.elysiastobbehomeloans.com
I consider it a privilege to share this information with you.

I wanted to share with you some of the questions I got yesterday at the FL Times Union Home Buyers Expo. Over 1500 people attended, it was a huge success!  I was honored to be asked to speak to their audience.

I did two presentations.  Each presentation gave a quick overview of two topics.  The first presentation was 3 Monumental Money Mistakes To Avoid & Why Shopping for the Best Interest Rate can Cost you Money. Common questions pertained to the differences in FHA and Conventional Loans and the different mortgage insurance rates for each as well as the funding fees for government loans.

The second presentation covered 7 Massive Mortgage Mistakes to Avoid & VA, FHA & Conventional Financing Highlights. A common question was, "What if I have a 640 credit score and I am a first time home buyer, can I put down only 3%?"  Yes, if you are a first time home buyer and qualify for conventional loan financing, you can put down as little as 3% with a 640 credit score. However, the monthly mortgage insurance will be more expensive due to the 640 credit score. Here are some highlights from the 2nd half of this presentation.  I hope you find this information useful.

Here are some VA Loan Highlights:

•Minimum Down Payment 3.0% for first time home buyers, otherwise 5%

•No Funding Fee

•Monthly MI varies based on down payment, credit score, type of residence, varies from 0.22%-0.74%

•MI is automatically removed at 22% equity

•Minimum Credit Score 620 with 20% down payment or 640 with 5% down payment

***Veterans, THANK YOU for your Service!!

Here are some FHA Loan Highlights:

•Minimum Down Payment 3.5%

•FHA Funding Fee of 1.75%

•Monthly MI of 0.85% with 3.5% down or .80% with 5% down payment

•MI is for the life of the loan

•Minimum Credit Score 580

Here are some Conventional Loan Highlights:

•Minimum Down Payment 3.0% for first time home buyers, otherwise 5%

•No Funding Fee

•Monthly MI varies based on down payment, credit score, type of residence, varies from 0.22%-0.74%

•MI is automatically removed at 22% equity

•Minimum Credit Score 620 with 20% down payment or 640 with 5% down payment

***Please keep in mind this is only an example for illustration purposes.  These interest rates may not be available and/or you may not qualify for this loan type.

All of this information can be found in much more detail in my #1 Best Selling Book on Amazon

To grab my new book, How To Get Approved for the Best Mortgage Without Sticking a Fork in Your Eye™, click here: elysiastobbehomeloans.com

For more mortgage tips check out our website www.bestmortgagebook.info

For video mortgage tips and tools subscribe to our YouTube

Channel: https://www.youtube.com/watch?v=YsL6BuJ8b-M

For sponsorship opportunities go to:  sponsorbestmortgagebook.info

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