Friday, May 21, 2010

Estimate Payments With an Interest-Only

If you are considering an interest-only home loan, an interest only mortgage calculator can provide you with valuable information about the loan. An interest-only mortgage is a type of loan in which a person's monthly payment covers only the interest portion of the loan and does not reduce the outstanding principal. Many people use this option as a way to get into a house because the interest-only payment allows them to have a lower monthly payment. With this type of loan, you eventually have to begin paying toward the principal, or you will never pay off the loan. For example, if you purchase a house for $100,000 and you only pay the interest, you'll still owe the $100,000.

With an interest-only calculator, you can compare a standard loan to one that collects interest only. You can also find out how soon you can pay off the interest-only loan if you add in extra money to the payment each month. To calculate the payments, you'll need to enter the total amount of the principal for the loan, the interest rate and the term. Once you enter this information, the mortgage calculator provides the monthly payment amount. Some online calculators for interest-only loans let you print a PDF file with the information or offer a tool allowing you to email the information.

By using an interest-only mortgage calculator, you can find out if the lower monthly payments will save you money in the long run or if you should try another type of loan. Take advantage of free calculators to figure out as many possibilities as you need in order to compare all your mortgage options. If you need more assistance, use the information as a basis for discussing an interest-only home mortgage with a financial advisor.


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