Loan Options
There are many newly available loan options aiming to help borrowers stretch their dollar. Although lenders used to require that both principal and interest were paid each month, there are now new loan options that allow borrowers to pay interest only payments, or even less if higher loan balances can be afforded. There are two basic options that are available for getting an expensive house: Interest only loans, and minimum payment option loans.
Interest Only Options
Interest only loans get you a lower payment than a regular loan can. This loan type can be used for several reasons. Payment stability is possible with no negative amortization, which means the loan balance basically increases over time. This is not possible with an interest only loan, because the loan balance constantly remains the same.
Minimum Payment Options
Minimum payment options allow borrowers to pay even less than in interest-only loans. Any amount paid less than the interest-only payment is added on to the principal, which is known as negative amortization. An increasing loan balance is sometimes acceptable to borrowers who believe the property value will increase, or they don’t really mind the increasing loan size. This type of loan above all else allows borrowers to really stretch their mortgage dollar.
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