Interest-only loans allow you to delay repayment of principal for 10 years, which may provide significant savings if you are planning to re-sell your home at the end of the interest-only period.
There are two types of Interest-only loans: Fixed-rate and Adjustable Rate. Both types can be used for primary residences and second homes, but their rates and terms differ.
Fixed-rate: At the end of the initial 10 years, loans amortize for the remaining term to include principal and interest. As a result, payments will increase.
Adjustable Rate: Rates may adjust after the initial fixed-rate period, which could lead to higher monthly payments in the future; however, principal payments will not be required until the eleventh year.
Choose a fixed-rate, adjustable-rate or interest-only mortgage for your second home.
Available options include:
Second homes may be rented out for portions of the year (seasonal rentals); however, rental income cannot be used to qualify.
**Conforming loans go up to $417,000, except in Alaska and Hawaii, where they go up to $625,500. Jumbo loans are between $417,001 and $2,000,000.
These loans are for investment properties. The loans are granted to individuals only-not available in the name of limited liability companies, partnerships or corporations.