Determine Payment Possibilities With an Interest Only Mortgage Calculator

Written by author on May 21, 2010 – 4:11 pm -

An Interest only mortgage calculator is a tool you can use to help you determine whether or not an interest-only home loan would be the best option for you to use to get into a house. In an interest-only loan, you monthly payment covers the interest for the month on the outstanding principal for the loan. Unless you pay extra, the principal remains the same as it did when the loan originated.

There are some people who benefit from an interest-only mortgage payment. If you work on commission or for a company with a bonus structure, an interest-only loan can be a good option. It allows you the ability to afford your loan payments for months in which you earn a lower commission. When you make more money or bonus, you can add the extra income to your loan payment and apply it to the principal, lowering the outstanding balance. The loan option may work well for individuals who know their income will increase over the course of the next few years.

By using an interest-only mortgage calculator, you can determine how much your monthly payment would be for the loan. To use the tool, you’ll need to enter factors like the amount of the loan, the interest rate and the term for the loan into the provided spaces on the calculator. Once you enter the information, the calculator provides you with the monthly payment and an amortization schedule. You can see how different interest rates or loan terms change the monthly payment, or you can compare a regular home mortgage to the interest-only one. Some free mortgage calculators let you see how much you would pay in a year as well as monthly. You can also deduct payments from the outstanding principal to determine how lowering it affects the interest-only payment.

from:   taramcclendon

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