Sometimes, The Interest Only Loan And The 10/ 30 Option Turn Into A Real Benefit To The Consumer

Category: Finance, Mortgages.

Of all the products in the interest only loan market, the 10, this product/ 30 interest only loan, might be the most beneficial to the consumer.

Because it actually works with the consumer in mind, on the same time frame that the average consumer s income level, and needs for, expense level retirement planning usually occur. Why? The 10/ 30 Interest only loan works in the following way: you borrow money in the form of a 30 year mortgage, with a fixed interest rate. What benefit does this option provide? The first 10 years are interest only payments, with the full amount of the principal being amortized over the last 20 years of the loan. There are several for the consumer who happens to be about 28 or 30 when he or she borrows, and a starter, with small children level income.

The greater demands of raising a family, providing a home for that family and stretching their budget to meet all the demands is the goal at this age. The consumer at this stage of their life doesn t necessarily have retirement on their mind. This option also will allow the family to live in a home that is big enough to accommodate their need for space, and still not eat up too much of their budget in a monthly mortgage payment. The interest only option provides for a larger tax deduction on their return, and most of these consumers will use the itemized deduction portion of their tax return. The interest only option means that the payment is smaller than it would be with traditional financing, but it gives the homeowner 10 years to make optional principal payments, get the kids through college, and then look to retirement, with only 10 years left to pay on a mortgage. The 10/ 30 Interest only loan looks pretty good from the consumer s viewpoint, so long as they don t loose site of the long term goal, and they re able to discipline themselves with their other expense. Sometimes, the interest only loan and the 10/ 30 option turn into a real benefit to the consumer.

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