Mortgage Monday

When the housing market bubble suddenly burst, the price for real estate was dramatically lowered due to the state of the economy. But for those looking to buy a new home, this is the perfect time to invest. Before you make any major moves, keep in mind the interest only mortgages when considering a pricier home for your current lifestyle. This means that when you purchase a home, instead of paying for a regular monthly portion of your mortgage, you will only need to pay the interest on the loan.

This can benefit those who are saving up for other things or who need time to gather the money for the mortgage. There are installment payments that can be monthly or every three months of the year which benefits the clients tremendously. The purchasers of the new home should keep in mind that these loans are strictly for paying interest. If you are concerned with paying a large sum at one time, then this is the right kind of loan for you.

The process of obtaining this kind of loan is not as difficult as paying monthly mortgage payments but you must prepare to pay a big estimate after the interest payments. The other option when having an interest only mortgage loan is refinancing the loan and going back to those timely mortgage payments.

Interest only loans, although effective for some, are highly criticized by financial professionals and advisors. Despite the momentary benefits of using these loans, there is extensive planning and financial budgeting involved when paying the lump sum. When preparing, make sure that all of your other payments, car insurance, water bills, etc., are taken into account. A majority of interest only loans have been terminated and heavily rely on appreciation of the home.

There is also the popular payday loans, which is a type of short-term borrowing where a lender will extend high-interest credit based on a borrower’s income and credit profile. A payday loan’s principal is typically a portion of a borrower’s next paycheck. These loans charge high-interest rates for short-term immediate credit. These loans are also called cash advance loans or check advance loans, here you can find 4 reasons you should avoid payday loans if you don’t have the right credit.

How Payday Loans Work
Payday loans charge borrowers high levels of interest. These loans may be considered predatory loans as they have a reputation for extremely high interest and hidden provisions that charge borrowers added fees.

Although interest only loans have its advantages, you must also take note of the disadvantages due to the major payment at the end of the duration. Before taking a loan, keep in mind different options before the big move is made. Each person’s financial situation differs and advice from peers and professionals will also help you make the right decision. Interest only payments may be difficult to take on for the  long run, so be sure to be aware of the consequences that will follow years after you sign the contract!