Types of Mortgage Articles Summary
Interest Only Payments
Have you heard that commercial about interest only payments for mortgages...the one where you're told about what a wonderful benefit it is to have a low, low mortgage payment and all the wonderful tax write-offs you will receive? Before you decide to buy now and pay later, that is pay big time later, take a moment to enlighten yourself a bit more about these so-called interest only payments. Think about it for a moment. If you just pay the interest on your home, will you ever start paying on principal and will you ever earn any equity into your property? By definition, a mortgage is a temporary, conditional pledge of property to a creditor as security for performance of an obligation or repayment of a debt. Simplified, that means you borrow money from a financial institution and they essentially buy your house and you pay it back. How can this happen if you're just paying interest? More accurately, interest only payments are a temporary reprieve for paying off a traditional mortgage. You may actually be prolonging the inevitable and eventually making it even more costly to pay off your mortgage.
Full article -->