Question:

How to find interest only mortgage lenders and choose between IO or Option ARM loan?

Answer:

Interest only mortgage lenders are most easily located online. Lenders who make traditional fixed and adjustable loans simply offer some of those with interest only option for part of the loan term. Home loans with IO option have higher rates and there is always the same loan available without I-O period, which will be cheaper in terms of interest rates.

Shop for Interest Only mortgage loans rather than lenders.

Interest only mortgage loans are back on the rise and it is not difficult to find one with whatever terms you may need. You are advised to watch out for IO lenders advertising loans that carry lowest rates. Lowest rates loans are usually Option ARM (flexible payment) loans and those have ultra low entry rates that can hold anywhere from a month to several years.

IO mortgage loans usually have their interest rate set for as long the interest-only period holds. It usually varies from 2 to 10 years. Your mortgage loan officer or broker may recommend interest-only home loan to you to minimize possible risks. Borrowers are usually tempted by the interest-only feature, and some also go for Option ARMs which are by far the most difficult mortgage products to handle.

If you have little experience with homeownership you are advised to ask your lender or loan provider for information on home loans, especially on ARMs, Option ARMs and IO mortgages. Lenders are required to distribute HUD booklets to potential clients, or they would have information brochures on their own loan programs.

Do not fall for widely advertised mortgage products. Not only is advertising cost incorporated somehow into the cost of the loan, but also commercials convey the wrong idea that the interest-only loans are easier to amortize compared to other loans. This is a very wrong widely spread misconception.

Borrowers are not always able to reason what the advertising tricks are, so when choosing IO and Option ARM loan you are strongly advised to seek professional advice from a loan specialist, upfront mortgage broker (UMB), or financial advisor.

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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