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An interest-only mortgage is a type of loan where you only pay the interest portion of your payment for a set period, typically 5 to 10 years. This can result in lower monthly payments during the interest-only period, but it also means that you are not building any equity in the home. After the interest-only period ends, your payments will increase significantly as you begin paying down the principal balance. Interest-only mortgages can be risky, especially if you are not prepared for the payment increase.
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