Is there a 15-year interest only mortgage?


Well, yes, a 15-year interest only mortgage product exists. It will come in different flavors, though.

A 15-year Interest Only fixed rate mortgage (FRM) will allow no more than 7.5 years of interest only payments. This is a 15-year IO fully amortizing FRM with interest rates slightly higher than a normal 15-year FRM. A more popular 15-year IO fixed rate mortgage is the 30/15 IO loan with 15 out of 30 years interest only period.

Most IO mortgages are offered as adjustable rate home loans - pure IO ARMs, or Option ARMs with built-in interest only payment option.

Fixed rate interest only mortgage loans also exist - it is common that the Interest-Only period is limited to 5 or 10 years and total mortgage life is 30 years. It will be unusual to find an Interest Only FRM with the interest only option running for the entire term of the mortgage.

Interest Only mortgage loans can be used to buy more house and more debt.

Homebuyers who use the Interest Only option to get themselves in a larger debt buying bigger house would risk their homes if they don't build equity. In a down real estate market Interest-Only loans can be dangerous. However, when homes are appreciating they are a convenient way to add up equity with less out-of-pocket money.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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