An interest-only loan is a loan in which the borrower pays only the interest for some or all of the term, with the principal balance unchanged during the interest-only period. At the end of the interest-only term the borrower must renegotiate another interest-only mortgage,[1] pay the principal, or, if previously agreed, convert the loan to a principal-and-interest payment (amortized) loan at the borrower’s option.
Interest-Only Mortgages
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