Frisco Texas Mortgage, Real Estate, Events, and more

Interest Only Loans in Texas Are Still Around

Interest-only loans in Texas are still around. Even though they are not as popular as they once were, they do still exist.
Over the past few years, they have been the topic of conversation. Many homeowners were placed into these programs without being told exactly what type of program that it is or without completely understanding them when they agreed to them. There are certainly benefits of Interest Only Loans when purchasing a home or refinancing, but there are also risks associated with them. 
* Please note that this product is available to anyone that qualifies but personally, I only recommend this program for someone that has a fixed monthly income with a potential of receiving a monthly or quarterly bonus. Or, someone that is paid on commission only.
Here are just a few of the benefits of interest-only loans:
- Smaller interest-only payments give borrowers with uneven income a greater degree of flexibility. The savings generated from interest-only loans versus traditional mortgages give borrowers greater control over their finances, freeing up more money for use in investments or catching up on other bills.
- Smaller monthly payments during the initial interest-only term allows borrowers to afford more home for the same amount of money, or less. Depending on your income, this could mean an increase to your purchasing power by $5,000-$30,000.
- Interest-only payments made during the initial loan term are entirely tax deductible.

The risks of interest-only loans:
- If home prices fall, borrowers could end up owing more money on a home than it's actually worth. Unless the borrower makes payments against the principal, the home builds no equity aside from annual appreciation.
- After the initial interest-only period, the principal balance can cause monthly payments to skyrocket, especially if interest rates have increased.
- The minimum monthly payment option (available on some interest-only loans) doesn't cover the total interest accrued for a given month.  The difference is tacked onto the balance, increasing the principal balance, which results in negative amortization. A negative amortization can erode existing equity already built in a home.
Understanding some of the benefits and risks associated with interest-only loans is imperative when searching for a mortgage that fits your needs.  If you're looking into refinancing your mortgage or considering buying a home, you need a professional who will take the time to identify your financial goals, and who has the experience and the resources to help you achieve them.
Do not move forward with a Loan Originator that is trying to fit you into a specific loan program without telling you the pros and cons of that program. Ask questions to understand your mortgage options and why one program may be better than nother. There are many programs and options available, but not all of them will help you achieve your financial goals.



Are you looking to purchase a Texas home?  Perhaps you love your Texas home but would be interested in refinancing your Texas mortgage to a lower interest rate?  

I'll help you get pre-approved for your Texas home loan and even suggest some very knowledgeable and professional Real Estate Agents in your area of choice.  If you are available to talk, I am available to listen.  Give me a call or visit my website for more details.

Do you want to know all of your mortgage options? Call me today and let's discuss them further.

Texas Home Loan Consultant

Always available for your Texas Mortgage and Home Loan needs!

John R Cannata    P#214.728.0449

NMLS # 322646

Texas Home Loan Expert

Frisco TX Mortgage



The views expressed on this site are mine alone and do not reflect the views of my employer.

Comment balloon 13 commentsJohn Cannata • September 20 2011 11:24AM
Interest Only Loans in Texas Are Still Around
Interest-only loans in Texas are still around. Even though they are not as popular as they once were, they do still exist. Over the past few years, they have been the topic of conversation. Many homeowners were placed into these… more
FHA MIP Changes Effective April 18, 2011
FHA MIP Changes Effective April 18 2011 Its only a week away for yet another change which will effect homebuyers in Frisco Texas A few weeks back, it was announced within HUD Mortgagee Letter 2011-10 that there would be an increase… more
There is a Risk involved with using your 401K Account as your Down…
Sometimes finding a home can be a long process, but you did it. You have finally found the home of your dreams. Now there is one thing that stands between you and your new home. It’s the Down Payment. Some home buyers are looking to use… more
Additional Principal Reductions - Why Its Worth It.
You heard the radio adds, the television commercials, and your neightbor talk about the mortgage rates being at an all time low. Then you called your local mortgage company only to find out the rate was not much better than your current rate Now… more
Do you have an Adjustable Rate Mortgage? Did your mortgage payment…
Mortgage rates are low, but this isn't the first time. Rates have been low in the past. As a matter of fact, between 2003 to 2005, interest rates were extremely low. It was the perfect time to take out an Adjustable Rate Mortgage (ARM)… or was it?… more
Debunking Mortgage Myths
If you've been living on another planet, you might not have heard all the media reports about the mortgage market conditions. It's been front page news for months - lots of doom and gloom that make home owners and prospective buyers doubt the wisdom… more
Save over $22, 000 - Don't worry, I am not selling you anything.
That's right, you can save THOUSANDS of dollars. I know, sounds impossible and you are waiting for the punchline or for me to tell you to invest in something that will have huge gains. Nope! That's not my job, but I am sure there are plenty of… more
Why aren't you more involved with YOUR credit scores?
It's no secret that your credit score plays a major role in being approved or denied for a loan Over the past 2 weeks, I have spoken with about 6 customers that are looking to purchase or refinance due to the great mortgage rates. In most… more
Citigroup - Another lender trying to make a difference
It was announced earlier this week that Citigroup has initiated a plan to place foreclosures on hold They are implementing a similar plan as Wells Fargo, Morgan Stanley Chase, and Wachovia (soon to be Wells Fargo). This moratorium will affect… more
Credit… Your Greatest Asset
Credit… Your Greatest Asset In my first post I discussed what to look for on your credit report such as checking for accurate data. Starting with the basic information like you name, employment, and address. Then moving… more