What is interest-only mortgage?

An interest-only mortgage is a type of loan that requires a borrower to pay only the interest portion of the home loan’s monthly payment for a set period of time. This type of loan is generally used to help lower the overall monthly payment of the mortgage. During this “interest-only” period, the borrower is not required to pay the principal balance of the loan. In Virginia, an interest-only mortgage is available to many borrowers. It requires the borrower to have the ability to qualify for the loan, pay the closing costs, and have sufficient income to make the payments. These loans are generally available to buyers with higher incomes, as the payments are typically higher than a traditional mortgage. In addition to the higher cost, an interest-only mortgage may be more risky for borrowers than traditional mortgages. Since the borrower is not required to pay the principal balance of the loan during the “interest-only” period, the borrower is more likely to default on the loan if they do not make the payments. There are also restrictions placed on the amount of principal that can be paid off during the “interest-only” period. It is important for buyers in Virginia to understand the risks and rewards of an interest-only mortgage before making the decision to pursue one. It is also important for borrowers to discuss all aspects of the loan with their lender before signing any paperwork.

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What is interest-only mortgage?

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