Common Misperceptions of an Interest Only Fixed Mortgage

Interest only mortgages are popular in the lending market today and many people still do not fully understand them. There are a few misconceptions that are popular among the general public that need to be analyzed before using this loan product. Here are a few common misconceptions about interest only fixed mortgages. 

You Pay Only Interest

Some people think that when you get an interest only mortgage, you are only going to pay interest on the loan. While it is true that you only pay for the interest on a monthly basis, you will have to pay for the principal at some point. At the end of the loan, an interest only mortgage will have a balloon payment that you must make. You will have to address the principal on the loan before it can be resolved. 

Interest Only Loans Are Always Bad

Many people out there have the idea that interest only loans are always going to be your worst choice. They hear horror stories about balloon payments and decide that they are way too dangerous. Depending on the situation, there are some situations where an interest only loan is your best option.