Traditional mortgages require that each month you pay back some of the money you borrowed (the principal) plus the interest on that money. The principal you owe on your mortgage decreases over the term of the loan. In contrast, an interest only mortgage payment allows you to pay only the interest for a specified number of years. After that, you must repay both the principal and the interest.

Most mortgages that offer an interest only payment plan have adjustable interest rates, which means that the interest rate and monthly payment will change over the term of the loan. The changes may be as often as once a month or as seldom as every 3 to 5 years, depending on the terms of your loan. For example, a 5/1 ARM has a fixed interest rate for the first 5 years; after that, the rate can change once a year (the "1" in 5/1) during the rest of the loan.

The interest only mortgage payment period is typically between 3 and 10 years. After that, your monthly payment will increase - even if interest rates stay the same - because you must pay back the principal as well as the interest. For example, if you take out a 30-year mortgage loan with a 5-year interest only payment period, you can pay only interest for 5 years and then both principal and interest over the next 25 years. Because you begin to pay back the principal, your payments increase after year 5.

So knowing that your payment will at some point change, what are some important dates that will impact your interest only mortgage payment?

Introductory period. Many interest only mortgage payments have a 1-month or 3-month introductory rate period at the beginning of the loan. During this period, lenders use a lower interest rate to calculate your payments. For some interest only mortgage payment loans, this introductory period lasts 1, 3, or 5 years.

Interest rate adjustment period. Most interest only loans have interest rates that adjust monthly after the introductory period. You could find that the interest you owe increases even though your minimum payment stays the same each month, adding to your negative amortization. Typical interest rate adjustment periods for an interest only mortgage are monthly, every 6 months, or once a year.

Payment adjustments. Most interest only mortgage payments have payments that adjust once a year. In addition, most of the adjustments are limited by a payment cap, often 7% to 8%. Keep in mind that payment caps do not apply when your loan is recalculated at the normal recalculation period. Payment caps also do not apply if your balance grows beyond 110% or 125% of your original mortgage amount.

Recalculation period. With an interest only loan, your loan will be recalculated. The recalculation period is usually 5 years, but it can vary depending on the terms of your loan. When your loan is recalculated, the payment cap does not apply, so you could see a large change in your monthly payment. After your loan is recalculated, you will still have the option to make a minimum payment. Interest only loans are recalculated at the end of the option period (usually 3, 5, or 10 years); after that you will pay back both the principal and interest for the remaining term of the loan.

Make sure that you remember the critical dates that impact your interest only mortgage payment. Keeping track of these dates will allow you to budget for any changes and analyze if or when a refinance makes sense.