Courtesy Tony Guaraldi, VP of Mortgage Lending Guaranteed Rate Mortgage
Are Interest Only loans coming back??? Well technically they never fully left the industry even after the mortgage market meltdown in 2008, but most people are unaware these programs still exist today. However, there is only a small handful of lenders that offer the Interest Only programs today and they are nothing like “fog the mirror” test to qualify for them as it many people joked about prior to 2008. In fact the Interest Only programs offered today are even more strict in terms of income, down payment, and credit requirements then their principal in interest counter parts. Makes sense that underwriting would be more strict as the lender is taking more risk by not have principal reduced every month.