This article reports that the fate of interest-only mortgage is not optimistic. In a typical interest-only mortgage, borrowers pay only the interest on the mortgage in the first 10 years, and then pay the principal and interest for the next 20 years. According to professionals, interest-only mortgage works best for the wealthier and financially disciplined borrowers. Or people who doesn’t want to keep their house for many years, and who needs greater cash-flow options.
However, because of that the interest-only mortgage, not many lenders are interested in investing their money on this mortgage. Or, they require higher interests, which combat borrower’s intention of borrowing money. Also, it makes banks gain risk of running their business.
Therefore, understandably, unless in a special phase which people are in need of large amount of flowing currencies, it is not easy to keep backing the interest-only mortgage.
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