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Interest only mortgage loans are a new phenomenon in the refinancing market and as well as the property and home purchasing industry. While one important appeal of interest only home mortgage loans is the opportunity for bigger cash flow every month, such increased flow usually come with a high price tag. While one might enjoy greater cash flow every month, home owners might sacrifice the chance to get a fixed rate mortgage loan and the capacity to build his equity. The significant advantage that home owners can enjoy from interest only mortgage loans is the opportunity to increase cash flow every month. Consumers who go through refinancing using such loan more often than not will possess more cash every month if only because they only need to pay interest on mortgage initially. With principal payment being reduced, this makes it easier for people to buy a nice house or enjoy more comfortable living with the bigger budget. While can may be said that interest only mortgage loans is not ideal, they are actually beneficial to consumers. This is not true, however, in all situations particularly when the home owners find themselves in the position of having difficulty paying their monthly obligations. In such case, the home owners would be willing to suffer financial loss just so that he can still pay his bills every month. Interest only home mortgage loans are offered usually with ARM or adjustable rate mortgage, the interest rate of which is not at all fixed and normally fluctuates depending on the rise and fall movements of prime index. Such risks are definitely costly for most home owners if there is significant rise on the rates. An adjustable rate mortgage refinancing option with an interest only mortgage loans component can be really worthwhile in certain situations. To cite an example, if a home owner possess a hybrid mortgage, one which has a fixed rate during interest only part and adjustable rate during principal and as well as interest portions of the loan, he can actually take advantage of such situation if he plan to stay and use the home only within the interest only duration. For more interesting and engaging articles and discussions on mortgage topics such as direct mortgage lender, do visit our Refinance Home Mortgage blog.
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