| Interest only loans can be fixed-rate mortgages (FRM) | | | | adjusted according to the index, plus the margin |
| or adjustable-rate mortgages (ARM). Though it is | | | | (rounded to the nearest 1/8 percentage point). The |
| generally felt that interest only loans have lower | | | | interest rate cannot change by more than 5.00 |
| interest rates, this is not true. In fact, they may have | | | | percentage points than the initial interest rate over the |
| higher rates, because the risk is greater in IO loans. | | | | whole term of the loan. Similarly, it cannot decrease |
| When applying for an interest only loan with adjustable | | | | less than the margin on the loan. Interest only loan |
| rates, it is very important to consider what the future | | | | products can be 30, 20, 15 or 10 year fixed mortgage |
| interest rates are likely to be. This is because | | | | with varying adjustable rates. |
| repayment in the future will consist of both interest as | | | | With increasing real estate prices, interest-only loans |
| well as the principle. | | | | are becoming a preferred option for many. There are |
| For interest only loans based on the adjustable | | | | also many lending companies that are giving attractive |
| mortgage rates, the interest rate is calculated and | | | | options on interest-only loans. Information is available on |
| changed based on the index rate. The index rate | | | | the Internet. They also contain easy-to-use interest |
| depends on the average of Interbank offered rates | | | | only calculators that tell you the kind of repayments |
| for one year US dollar -denominated deposits in the | | | | you will have to make. The current interest rates on |
| LIBOR (London Interbank Offered Rate). This Index is | | | | interest only loans are also available on the Internet. |
| published in the Wall Street Journal. The interest rate is | | | | |