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Interest Only Mortgage
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Fixed Rate
Interest Only Mortgage
Fixed rate Interest only mortgage products can be an excellent choice for many consumers. Fixed rate interest only mortgage products offer the lowest payment. Fixed rate interest only mortgage products mean you can buy more home, or if you are refinancing into a fixed rate interest only mortgage, you will have a lower payment than with a fully amortizing mortgage. You may make additional payments toward your principal balance at any time. By reducing the balance, the next payment will be lower as your payment is calculated on the current amount.
Fixed rate interest only mortgage products are available for a 30 or 40 year term, with the first 10 years interest only and the final 20 years fully amortizing although I am now seeing many lenders offering this option on Interest Only Mortgage ARM products with fixed rate periods of 3, 5, and 7 years being the most common. At the end of the interest only period, your fixed rate interest only mortgage will convert to fully amortizing for the remaining term. Stated income fixed rate Interest only mortgage products are readily available as well.
Of all of the Interest Only Mortgage programs available, the Cash Flow Interest Only Mortgage offers the greatest flexibility by far.
Fixed rate interest only mortgage products were originally designed for individuals whose income is cyclical. For example, a sales executive with a relatively low base salary and commission payouts quarterly would benefit from a fixed rate interest only mortgage. You have the lowest possible payment during months when no bonus is paid and you can make contributions to the principal balance when the bonus is paid. However, I am seeing individuals in many situations choosing a fixed rate interest only mortgage as a method of lowering their payment, sometimes significantly.
This, or any other product, will not be the right choice for everyone, but it can be a very effective choice for some individuals. Please call or send an email with the specifics of your situation and I will be happy to discuss this alternative with you.
An example of how powerful this tool can be:
On a $250,000 mortgage at 6.000% for 30 years-
Principal and Interest payment= $1498.88
Interest Only mortgage payment at 6%= $1250.00
Total Monthly savings= $248.88
To make the comparison for your own specific situation, mortgage calculators to find the amortizing payment are available on this website. The math to find the simple interest payment is, Loan Amount x Interest Rate / 12.
I have developed a PowerPoint presentation on fixed rate interest only mortgage products, some real world examples, and some suggestions on how best to use them available by email
Read more about Fixed Rate Interest Only Mortgage Closing Costs
As a Certified Mortgage Planning Specialist, I offer an analysis of your situation today can make suggestions on how small changes in how your debt is structured today can have a life changing effect in the years to come. Read more about this free, no obligation service.
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