One of the more popular loans that consumers are refinancing into is an interest only loan. These loans provide you the flexibility of not having to make a principal and interest mortgage payment each month, but instead you are able to pay only the principal. I know you are thinking right now, how am I supposed to get anywhere or get ahead with my home loan if I never pay it down. Your house should always appreciate in value so you will still gain equity if you choose to make only an interest only payment each month. Also, the interest only loan provides you with the opportunity to pay more than the interest only payment each month. Anything that you pay above and beyond the principal will go directly towards the principal of the loan balance. This is one reason why people like the flexibility of having an interest only loan. Some people use this type of financing to free up extra money each month to invest towards retirement, others like to pay down high rate credit card debt and some others are simply self-employed or commissioned and like the flexibility of having a lower payment each month for the months they do not make as much. These types of loans are not for everyone so consult your mortgage professional to see if it may be right for you.

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