How to Shop for Low,Interest Only Mortgages

Where do you find low interest, interest only mortgages? Almost every store on the street offers thesetypes of mortgage products, but who is the best, and who is the lowest? That's going to take some work on your part,and maybe just a little luck. 

What kind of information will you need in order to shop for and secure a great interestonly mortgage, with a great low interest? Well, you're definitely going to need a good credit rating, proof ofincome, an appraisal on the property, and a little bit of luck. There are several products out there in theinterest only mortgage segment of the market, and a few are actually going tohave a pretty low interest rate tied to them. 

For example, the 3/1 ARM, or the 5/1 ARM, these mortgages should have great interestrates, and if you have great credit, you should be able to find financing tosuit your budget, your desire for a low interest rate, and an interest only mortgagethat you can live with. These types ofadjustable rate mortgages offer the interest only feature for a very limitedtime, and this is what the average consumer should discipline him or herself touse for financing. Extending theinterest only option out past these years, could put the consumer in a direposition, should the real estate market take a downward turn, they're going tobe left with a huge mortgage, and property that is no longer worth the originalmortgage amount. Now, that's not likelyto happen since the value of the average home in America has seen a steady 5 to 6%growth for the last 10 years. But, itcould happen. Take a look at the stockmarket after the tremendous growth spurt of the late nineties.

Other variables in your quest for a low interest rate will be determined by the typeof lending institution you choose, the determination of any government programeligibility, and your geographical location. 

Banks are traditionally a little higher with their down payment requirements, but theirinterest rates are usually lower than those of a mortgage company. The exception: online mortgage lending. Thanks to the fact that this is an area ofgrowth that everyone and every company are promoting, they're striving tocompete with even the lowest interest rate lenders, in order to grow theirmarket. 

What kinds of government approved mortgage loan programs are available for the lowinterest-only mortgage shopper today? There are actually more programs available today than any other time inrecorded mortgage history; and the ability to qualify for these programs is at anall-time high. Fannie Mae, or theFederal National Mortgage Association and Freddie Mac set guidelines andproduct availability for homeowners and residents that quality for low- tomoderate income based mortgages. They also offer low-interest only mortgages inorder to accommodate an ever broadening market. The graduated payment mortgageis an option for FHA homeowners who currently have low to moderate incomes butexpect them to increase substantially over the next few years; this can becompared to a balloon note or the interest only products in use today.

Your location will play a key role in your ability to obtain the lowest interestrate using the interest-only mortgage option, also. Prospective homeowners looking to purchase ahome in a high end, resort area will, of course, have more choices available,as there are more buyers and sellers competing, as well as lenders forbusiness. The other geographical contributing factor is the real estate marketin your area. If the market is great,prices are not suppressed, and there is moderate movement in the buy and sellmarket, it increases your chances of obtaining the low interest rate you'reseeking.

The interest only mortgage product and a low interest rate are not mutuallyexclusive. They can be paired, and underthe right circumstances produce a winning mortgage product for the rightconsumers. The route to achieving thisgoal will take education on the part of the consumer, hard work, and a littleluck in locating the right mortgage lender.