Asked by Carla  |  Submitted November 12, 2015

What is an interest only loan?

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  Answers  |  1

November 12, 2015

It means that for a pre-determined period of time you will pay only interest on your loan and nothing towards the principle. I would not recommend this to anyone looking to stay in one place for a long period of time. I've had many people try and refinance in order to get out of an interest only loan and they cannot because the value of the property has not increased; which would then force them to come into the new loan with a large down payment. However, in some situations it is an appropriate choice.

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