{"id":9113,"date":"2018-02-27T04:20:10","date_gmt":"2018-02-27T04:20:10","guid":{"rendered":"http:\/\/www.realestatewords.com\/?page_id=9113"},"modified":"2021-11-03T20:08:59","modified_gmt":"2021-11-03T20:08:59","slug":"straight-loan","status":"publish","type":"page","link":"https:\/\/www.realestatewords.com\/straight-loan\/","title":{"rendered":"Straight Loan \/ Straight Term Mortgage \/ Interest-Only Loan"},"content":{"rendered":"

Straight Loan \/ Straight Term Mortgage \/ Interest-Only Loan Definition<\/h2>\n

A straight loan<\/strong> (also known as an interest only loan<\/strong> or straight term mortgage<\/strong>) is a loan in which the borrower is only required to pay interest payments until the maturity<\/a> date of the loan, when the entire principal balance is due.<\/p>\n

Explanation<\/h2>\n

Straight loans were quite common in the early 20th century, when their use began to decline. Today they are typically used for development loans.<\/p>\n

Consider a straight loan of $10,000, at a 5.0% rate, over a 10 year term.<\/p>\n

($10,000 x 5.0%) = $500\/year in interest. $500\/12 months = $41.67\/mo., interest only payment.<\/p>\n

Borrower would pay $41.67\/month, until the maturity date of the loan, when the last $41.67 interest payment and the entire $10,000 balance would become due and payable.<\/p>\n

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