“Interest only” loans, while not without risk, are a fairly easy way to save money and are a popular alternative to traditional fixed rate loans. Seattle interest only home loans offer consumers two main benefits: greater purchasing power and increased cash flow.

Sammamish Mortgage, serving the Pacific Northwest since 1992, is a family-owned, referral-based mortgage company here to meet the mortgage needs of the Seattle and Bellevue areas of Washington, including Sammamish, Redmond, Issaquah and all of Washington and Oregon. We pride ourselves on long-standing business relationships built on the foundation of trust, integrity and excellent business practices. Let us help you decide if a Seattle interest only loan is best for you.

Advantages and Disadvantages of the Interest Only Loan

With Seattle and Bellevue interest only loans, the borrower has the choice of only paying the interest due on the mortgage, but you can, of course, pay more if you so choose. There are numerous benefits to interest only loans including:

• They work well if you are on a tight budget, saving you $300-400 per month
• They allow you to qualify for a larger home
• They work well if you plan to stay in the home for only a few years. With a conventional 30-year mortgage, in the first couple of years, payments are applied directly to the interest on the loan. If you want to stay in the home for only 3-5 years, an interest only loan will allow for a lower loan payment with almost the same principal balance as the 30-year conventional mortgage.
• They are the preferred loan for those who want to buy an extremely expensive home as most people who do buy expensive homes have no desire to pay off the home and appreciation is generally good. With an interest only loan, you can deduct your interest payments, and the money you save can be directed toward other investments.
• With rental property, you can increase your cash flow by having a lower monthly payment on the property.

As with any type of financial investment, there are facts about interest only loans you must be aware of, including:

• If the property does not appreciate in value over the initial 3-5 years, you may have to pay money if you sell the home because you are not paying down the principal on your mortgage. Even though this does not happen often, the possibility that it could must be taken into consideration.
• Interest only loans have a specified term. On most 30-year fixed interest only loans, most lenders will allow interest payments for ten years, but then you must pay back the loan during the last 20 years, which means a higher payment than a conventional 30-year fixed mortgage.
• With low fixed rates, an interest only loan will be very appealing, but a traditional fixed product may be more prudent if you plan on staying in the home for many years.

Please contact Sammamish Mortgage today to learn more about our interest only loans. Seattle and Bellevue interest only loans, mortgages and information about how they may work for you.