Interest-only mortgage payments

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Interest-only mortgage payments
by Lucy Griffin, BOL Guru
BIO AND CONTACT INFO

QUESTION: Is there any law or regulation that would prevent a Bank from accepting only interest on a mortgage loan for a monthly payment and then attaching the additional amount due to the end of the loan term?

ANSWER: Yes - it is called Truth in Lending, Whether you can do this depends on what you have disclosed as the finance charge and APR. This practice will have the effect of increasing the total finance charge because the principle balance won't amortize. You could end up paying the customer quite a significant restitution sum.

First published on BankersOnline.com 2/5/01

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