What is the difference between a French Drain and an Equity Loan? Can you really profit from these types of investments if you don’t know anything about them? There are a lot of risks associated with an interest only mortgage loan, so you want to make sure you are making the right decision. This type of home equity loan may not fit your particular financial situation, and it is important that you know what you are getting yourself into before jumping into an investment opportunity like this one. There are other options out there, so don’t rush. Take the time to educate yourself and find out if it is the right choice for your financial future.
A French Drain Long Island NY. This type of investment means that you will not receive any payment during the life of the loan. The interest will accrue from the date of purchase of the home, and will be applied to the cost of the home. If you choose to keep the home after the purchase date, you can refinance the loan and use the money towards paying off other debt, thereby reducing your interest rate.
A lower interest rate is a great benefit of this type of mortgage loan. However, the risk is much higher than a conventional mortgage loan, because you have no real collateral or asset that you are using as collateral to secure the mortgage loan. In the event of a default, the lending institution may sell your house, along with any assets they hold that you may owe them. This can be a devastating experience for many people, but on the bright side there are solutions available for those who are willing to seek them out.
The French Drain Mortgage offers some advantages over traditional mortgages, however it also offers some risks. Interest only mortgages require the borrowers to have a certain amount of money in liquid assets, such as savings accounts, CDs, or certificates of deposit, in order to qualify for the loan. After the interest only period is complete, the mortgage lender then adjusts the monthly payment amount. If the new payment amount is less than the balance of the original loan, then the interest on the loan is charged to the new balance. If the new payment amount is more than the balance of the loan, the interest is then applied to the remaining balance of the loan. Thus, interest only mortgages result in compounding interest that will eventually exceed the principal of the loan.
A second advantage of this type of mortgage is that the borrower has the opportunity to improve their credit rating. Each month that the principal of the mortgage is not paid off results in lower credit ratings until the mortgage loan is paid off. This makes it necessary to pay down the credit rating as quickly as possible, in order to achieve better credit ratings once the loan is paid off. Because a higher percentage of interest only mortgages are paid off within five years, and a lower percentage is paid off over ten years, it can be very advantageous to borrow money and make payments on the property rather than holding property that will have little or no resale value. Of course, the debtor may wish to consider their own credit rating before taking on a mortgage and getting any type of loan.
The final advantage of interest only loans is the flexibility of the lending institution. While it is common practice to offer fixed interest rates on mortgages, many lenders are willing to adjust the rate on an interest only mortgage to meet the needs of the customer. For example, there are banks that will offer three or four month interest only mortgage loans that have one payment that is significantly lower than the normal mortgage payment. This allows the customer to get into their property quickly, but pays a lower amount each month.
One disadvantage of the interest only mortgage is that it is difficult to qualify for a traditional mortgage loan. Although the French Drain has experienced less negative growth in the past few years, the properties on the island still typically sell for much less than others in the general area. This is due in part to the fact that the properties on Long Island are generally older and the general condition of them often precludes the ability to qualify for many types of financing. If you do qualify for a mortgage on a French Drain home, you will often have to put down a large down payment in order to afford the property outright. The lack of a down payment is the primary reason why people fail to realize the equity potential of this type of mortgage.
In the end, choosing to finance your French Drain loan using the interest only method is a decision that only you can make. Although you may get tax savings and instant financing when you finance a property with a interest only mortgage, you will find that the credit rating of the property does not begin to recover until several years have passed. While the interest only mortgage can save you money, it is not the best choice for borrowers with poor credit ratings. If your credit rating is low, you should not use this option as it will take several years to pay off and will only offer a small return on your investment. If you need immediate financing and do not mind paying a higher interest rate, you should consider an adjustable rate mortgage, but only if you are absolutely sure you can make the payments each month.