Interest Only Loan.  Most home loans require monthly payments made up of both principal and interest.  Not so with an interest only loan.  As the name implies, an interest only loan requires only interest payments during some initial period.  One reason people choose the interest only loan is to get into a bigger home.  Because no principal is included at first, you can qualify to get into a bigger home.  Some people just want a bigger home.  Others choose the interest only loan as an investment strategy.  They’re betting that the housing market and cost of housing is on the rise.  The more expensive home they can get into today, could translate into greater appreciation and home equity in the future.  There are risks to carefully consider.  If the housing market and value of the home were to drop, it would be more likely than traditional loan options that you’d end up owing more than the home is worth, known as negative equity.  Also, because principal isn’t being paid at first, your financing charges may be higher with this option.  Whether the rewards outweigh the risks depends on your specific financial situation.  Our mortgage professionals can offer some guidance should you be interested in this option. 

Complete and submit the adjacent Utah Home Network contact form to learn more about interest only loans and discover the best loan option for you.