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| Interest Only Mortgages and the Young Professional |
Here is one of the successful candidates for the interest only
mortgage. The young professional that is eager to get out into
the home ownership market. He or she is equipped with some level
of mortgage product comprehension, and a guarantee of increasing
income.
Today's mortgage market has seen a tremendous growth in mortgage
packages, variety and borrowing levels. The interest only
mortgage option, once thought to have gone the way of the Edsel
automobile, is back today and in use by the masses; in fact the
mortgage market has seen an increase in the interest only
mortgages from just a mere sliver of the market a few years ago,
to around 23% of the market share currently. That's huge growth,
especially in the mortgage industry in less than 5 years. Who
will benefit most from this type of mortgage loan product? What
type of consumer is it that would want an interest only
mortgage? Well, you will get several answers, but only one or
two will be correct. The really smart and savvy borrower, |
with
clearly established goals and objectives that include the
interest only option, the young couple that are moving up the
corporate ladder and won't be in the area over three years, and
then there's the most often sited consumer: This consumer is
buying a home with a fairly limited budget and wants as much
home as they can possibly buy. They generally fit into the
category of the couple with children, who need room and who plan
to be homeowners at that location for a while. The other
particularly successful candidate for these types of loans are
the young real estate investors, who are profit creators, and
won't retain the property long enough to warrant making a large
capital investment.
As you examine the young professional, his or her situation is
conducive to minimal investment requirement. He or she won't be
in this job position or this home over 5 years, and the most
likely, the company is willing to include a buy back clause in
the employment contract; how can you lose? All the |
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right
elements are in place for this to be a great marriage of needs
and wants being satisfied with one package. In cases such as
this, the interest only mortgage option is a great route to take.
What about the young couple with the growing family? Are they
the right candidates for such a purchase? Most often, the answer
would be yes. They're budgets are limited, for the present, and
their family is outgrowing the present home. Especially if one
of the spouses holds a professional degree, they should have no
trouble growing into a larger mortgage payment within a few
years. The interest only option gives individuals 3 to 5 years
to achieve an income increase, then the principal and interest
payment level kicks in, but their income will then support a
higher payment.
The real estate investors, commercial developers, land brokers,
and any other investor that operates within this realm of
business, is a potentially successful candidate for the interest
only option. This person, or |
business group, doesn't intend to
retain the property long enough for there to be a need for
capital investment. They need the capital free to make the
changes, required planned construction, or to advertise the
property for sale. These are the potentially successfully and
beneficial relationships that exist with the interest only
option. Are these the only individuals who secure interest only
mortgages? Definitely not. Regardless of the pros or cons to the
interest only mortgage, and regardless of the original intent,
many of the consumers securing these interest only mortgages are
doing so in order to lower monthly payments, to buy more house
for less money, and even to divert income to tax-deferred
savings. Some will be successful some will simply wind up paying
on their home for most of their life.
About the author:
Tony Robinson is a Real Estate Investor, Webmaster and
International Author. Visit http://www.ezy-mortgage.com/ for his
tips on mortgages.
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