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What is an Interest Only Real Estate Loan?

First of all, what people have commonly come to know as an interest only loan, is simply a regular loan that has an interest only payment option attached to it.

Typically, for a period of 5-10 years, your only payment obligation is to repay the interest on the loan. With interest rates being at their lowest in over 30 years, this type of mortgage option seems like a fantastic alternative. However, the cautionary note to all interest only loans is that after a 5-10 year period, you once again have to pay the full amount, both the cost of the principle mortgage and the interest.

As a long term solution to high mortgage costs, or as an opportunity to reduce your monthly mortgage repayments significantly, interest only tribal online loans are a high risk solution. The risk of possible rising interest rates in the future, and the inevitable large increase in your mortgage repayment 5-10 years down the line, makes this an option that is only really for just a few people, such as real estate investors or home-owners who plan on selling up their estate quickly.

This is not to say that an interest only home loan would not be beneficial for a typical home-owner. Especially with the recent trend, where in areas where house prices are rising, interest only loans are increasingly becoming a consumer favorite.

An interest only real estate loan is a chance to save costs, and take advantage of rising house prices in the long term for the shrewd investor, but is much less of a viable option for most home-owners.

Allen Stevens, is the main writer for http://www.homeequityloanrefinancing.blogspot.com, and has previously worked in the Banking sector for 12 years as a loan advisor. Today, he works as an Internet entrepreneur.