Buying a house? Besides the number of bedrooms and bathrooms between its walls, the most important aspect of buying a house is the ability to finance the house. There are different options available to consumers concerned with their financial situations, and it is not impossible for consumers with temporarily less-than-ideal fiscal situations to find adequate and safe financing and repayment options. In the state of Michigan, consider an option given by Michigan Lending Group: the Michigan Interest Only Mortgage.
A Michigan Interest Only Mortgage means exactly that- the consumer merely pays the interest accrued on the mortgage, for a certain number of years. This allows the consumer to lower their monthly mortgage payments, leaving more of an opportunity to reduce other debt, buy time to restructure budgeted spending, or simply save some money as a fall-back in case of an unexpected inability to repay a month. For those few years, the principal is not touched, so the loan will not amortize, meaning it will not reduce over the years. That is, until the time has elapsed in which only the interest is paid. Often, (and I say often because every situation is different) the amount paid monthly during the Interest Paid portion is significantly lower than the amount to be paid with the principal attached.
The only issue to consider is the length of the loan. On a traditional mortgage, the norms for an average house would be a loan life of 20 years. Michigan Interest only mortgages, along with other alternative financing options have a tendency of being lengthy. This, of course, is the trade off for making lower payments from month to month. Many times, the mortgage turns out lasting about 30 to 40 years, depending on certain factors of the loan, including origination fees, penalties, points etc.
Personal responsibility takes a lot of importance here, especially since payments start out low, for the first few years, then increase after the period of interest only payments are discontinued. An interest consumer should only follow through with this loan only if they are certain that they are able to afford it, even in, and especially through the payment increase.