QIt's Been Almost 10 Years Since I've Had My Interest Only Loan And Now My Payments Are Going To Increase Substantially Since My Lender Requires I Pay The Principal Part Of My Loan. My Income Isn't Enough To Cover My New Payments. What Can I Do?
AIf you want to keep your home, but you can't afford the payments that your loan is going to require once your interest only period is over, you may want to think about refinancing, and possibly into another interest only loan. Since interest only loans can have lower initial interest rates than traditional fixed-rate mortgage loans, if your loan doesn't have a prepayment penalty you may be able to afford to send a few extra dollars in with your monthly payment, effectively paying down a portion of your principal even though you're still enjoying the low monthly payment that an interest only loan affords. If the idea of another interest only loan isn't appealing to you, you might want to reconsider your current housing situation. You might also have to evaluate whether or not interest rates have risen to the point that even if you were to take out another interest only loan, you still wouldn't be able to afford the monthly payment. If you've purchased more home than you can afford, it might be time to consider less expensive housing.