Interest Only Loans and 1% Rates...Too Good To Be True? - Fox29 WFLX TV, West Palm Beach, FL-news & weather

Interest Only Loans and 1% Rates...Too Good To Be True?

The advertisement says "Rates Starting At 1%." How can that be true? What are the "strings?"

These are technically "start rates." The interest is really being deferred to the back end of the loan. While these can be excellent financial products, they are not for everyone.

You should have a plan for what you want to do with the property being financed. How long do you want to keep it? Will you live in it or rent it out?

Buyers who know they won't hold a property very long can really benefit from these loans.  Unfortunately too many people were using them to flip homes in the hot real estate market.  Now many of those people are facing staggering monthly payments and in some cases, foreclosure.   

Low rates aren't everything! Sometimes mortgage companies run ads with incredible offers just to get their phones to ring. Many times another product is a better fit for you, even if the rates are higher.

You should really consider how much a loan will cost you in total, before signing a contract.  Factor in your closing costs, pre-payment penalties if they exist, and the total interest you will pay over the life of the loan.  If it is a variable interest loan, plan ahead for rates that may go up.

If you have questions about how this could help you, call Jason Biro at Team One Lending:  (561) 868-1808 ext.3

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