Mortgage lenders will only let you get an interest only mortgage if you have another way to pay off the loan, such as savings, investments, or other assets. If you do not have an income, you can’t get an interest only mortgage. You can use a home loans calculator to compare mortgage types and various lenders once you know the size of the loan you need to purchase a home.
While you may have an interest only mortgage, it may not allow you to purchase a home. Mortgages also come with other rules.
Alternative
An alternative mortgage can be used if you can’t qualify for an interest only mortgage. An alternative mortgage requires you to put 10% down on your home and gives you a fixed monthly payment for the life of the loan. This alternative mortgage does not pay any interest until the time the mortgage ends or is refinanced. In addition, unlike an interest only mortgage, you are not guaranteed to make a certain amount of money on the mortgage, you can discover more by clicking here.
The fees you will pay will depend on your income, net worth, and other factors. You may not qualify for an alternative mortgage if you do not have access to an income or savings. You will also be required to keep up with your payments for the life of the loan. If you have kids, you may also be required to do things like paying child support. If you have children, consider them an asset that will be lost if you leave.
To learn more about alternative mortgages, read the Consumer Reports article, Alternative Mortgage Loans for Seniors.
Home Equity Line of Credit
Home equity lines of credit (HELOCs) allow you to borrow up to the value of the home. You can start any time after you purchase the home, and the loan is secured by the home. If you lose the home, you may be required to pay a fee to the lender.
Although they are more common than interest only mortgages, HELOCs do not qualify for the FHA 203k deduction. You may qualify for one as an owner-occupied applicant, but only if you have a debt-to-income ratio of 40%. If the ratio is lower, you may not qualify as an owner-occupant. If you have a low income, you may be able to qualify as a sub-tenant, which allows you to use only your own income to repay the mortgage.
Like interest only mortgages, HELOCs are sometimes called conventional mortgage loans, mortgage-backed securities, home equity loans or building. Find high quality home bathroom remodeling and more for your home.
To learn more about home equity loans, read the Consumer Reports article, Mortgage Loans for Seniors.
Short-Term Fixed Mortgages
Short-term fixed mortgages are available for certain homes that are needed to keep the owner living in the home long enough to earn income. The fee for the short-term mortgage is usually equal to or less than the interest charged on the interest-only mortgage. The interest-only mortgage has an annual fee.
If you don’t qualify for an alternative mortgage and your income is not low enough to qualify for an interest only mortgage, you can apply for a short-term fixed mortgage. A short-term fixed mortgage is a very low-rate option. If you qualify for a mortgage that has an annual percentage rate (APR) of 18% or less, you can use this option.