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FREE Tax Tips and Updates

Browse our blog for helpful tax planning and preparation information.

Quick Tip:  Interest Only Mortgage Financing

5/24/2017

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What is Interest Only Financing?

Interest Only Financing is a finance option where the borrower only pays the interest on the mortgage through their monthly payments for a specified period of time.
Advantages of Interest Only Financing:
  • Monthly payments are lower than conventional loans (this is short lived)
  • This is an opportunity to pay off the loan faster
  • Flexibility in making over payments with unexpected funds
  • Free up Money
  • Keep Cost down
​Disadvantages of Interest Only Financing:
  • Dangerous
  • Housing prices fall (if the plan was to sell while paying only the interest)
  • No equity
  • Putting off inevitable

The biggest disadvantage to Interest only financing is that the payments are not deductible. You can't write off these payments= no decrease in tax liability.

Sum this up!

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Get a mortgage you can afford and avoid the interest only payments unless you are an investor and can afford to take the risk. I actually recommend buying a house that you will need to fix up, this way you get the house on less and you can make the improvements and renovations overtime. You may need to work on getting your credit score up and reducing your Debt to Income (DTI) all these are key factors in your interest rate.
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    Important Disclosures


    Spencer Accounting Group, LLC does not provide investment, tax, legal, or retirement advice or recommendations in these blogs. The information presented here is not specific to any individual's personal circumstances.

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    To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
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    These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

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    Author

    Keana Spencer is an Accountant, Entrepreneur, and Educator to her clients, with a strong passion.  Keana has over 10 years of experience and through her practice, she is a source of knowledge and strategies to her clients.

    Keana founded this website and decided and created this blog page to offer a space for those seeking knowledge to understand, however not to be confused with advice or planning strategies.

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