An interest-only mortgage is one in which you only pay back interest with no principal for a certain period of time. After this time period, which is usually five to ten years, the payment increases to include repayment of both interest and principal. Most lenders in Florida offer interest-only mortgages. As with any other mortgage, this option works best if you understand its advantages and disadvantages.

If you need a lower payment initially and anticipate you will be able to make larger payments later, an interest-only mortgage may be the right choice for you. Alternatively, if you want a larger mortgage to buy a more expensive house, an interest only mortgage may help because the initial payment you are required to make is smaller so you can borrow more. Interest-only mortgages may also be convenient for people who have an irregular income. If your cash flow is irregular and you still want to buy a house, an interest only mortgage may work. When you have more cash available, you can pay off part of the principal and the interest even before you need to.

The majority of interest-only mortgages offer adjustable rates, so if interest rates rise in the future, you may end up paying more. For as long as you pay interest only, you do not pay off any portion of the mortgage, and therefore, do not create wealth. A good strategy to avoid this is to pay off a certain part of the principal as often as possible in the interest only years of your mortgage.

Some lenders may mislead consumers by making them think interest-only mortgages save money. If none of the advantages of an interest only mortgage apply to you, consider examining other mortgage options instead.