If you're looking to finance a home purchase, an interest only home loan could be the perfect solution. This type of mortgage provides you with the ability to pay only the interest on your loan each month for a specific period of time (typically between five and 10 years), thus making your payments more manageable. However, there are a few essential things to consider when applying for an interest only loan before applying.
- The Amount of Time You Need: Before you apply for an interest only home loan, it's essential to consider how much time you'll need to make your payments this way. Lenders offer varying terms when it comes to this type of loan and some may require shorter terms than others. It's important to understand exactly how long you'll be able to make payments like this so that you can plan out your budget accordingly.
- Your Credit Score: A good credit score will always help when it comes to obtaining financing, but it's especially important when dealing with a lender who might look more closely at your credit history before deciding whether or not they should grant you the loan.
- Interest Rates: Most lenders will also have different interest rates available depending on the type of loan that you're taking out and your current financial situation. It's important to compare rates from different lenders so that you can get the best deal possible and make sure that your monthly payments stay affordable over time.
- Repayment Options: It's also crucial to understand what happens once the five to 10 year interest only period expires and how quickly any remaining balance must be repaid in full since some lenders may require repayment within a certain timeframe while others may give borrowers more flexibility in terms of repayment options. Knowing these details ahead of time can help prevent any surprises down the line that could affect your budgeting plans.
By understanding all of these considerations before committing yourself to an interest only home loan, you can rest assured knowing you've made an informed decision and one that will work best for your financial goals!
Central Pacific Bank currently offers Hawaii’s only interest only home loan option. If you are interested in an interest only home loan, get started by clicking the button below, or contact one of our experienced loan officers by visiting cpb.bank/mortgage.
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Understanding an Interest Only Home Loan
How an Interest Only Home Loan works?
An interest only home loan is an attractive option among those who want to invest in real estate but can't afford to make the large monthly payments associated with conventional mortgages.
An alternative to a traditional mortgage
Mortgages are often seen as a one-size-fits-all solution when it comes to buying a home, but they don't have to be. There are a variety of mortgage options available to you, and an interest only mortgage is one of them.