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Interest Only Libor MortgageInterest only Libor mortgage products can be an excellent choice. Interest only Libor mortgage products offer the lowest payment possible as you are not paying toward the principal. The interest only Libor mortgage may mean that you can buy more home than with a fully amortizing mortgage because of the lower payment. You may make payments toward your Libor mortgage principal at any time. If you do so, your next payment will be lower as it is calculated on the current loan balance. This is different than with a fully amortizing loan where additional contributions to principal do not change the payment and are not accounted for until the end of the loan. The Libor (London Interbank Offered Rate) is one of the most stable indexes available. I have a Libor chart comparing the Libor index to other common indexes. Email interest only libor mortgage questions The interest only Libor mortgage product was originally designed for individuals whose income is cyclical. For example, an individual who is a sales executive with a relatively low base salary but commission or bonus payouts quarterly would benefit from an interest only Libor mortgage. You would have the lowest possible payment during months when no bonus is paid and you would be able to make contributions to the principal balance when the quarterly bonus is paid. However, I am seeing individuals in many situations choosing an interest only libor mortgage as a method of lowering their payment, sometimes significantly. Interest only Libor mortgage products are available for a 30 or 40 year term, with the first 5 or 10 years interest only and the final 20 to 25 years fully amortizing although I am now seeing some progressive lenders offering this option on interest only libor mortgage ARMs. Some lenders who offer an interest only Libor mortgage require a prepayment penalty for the first 1-3 years and have caps on the amount your rate can change at any time and over the life of the loan. I always try very hard to avoid prepayment penalties on these and other types of loans and can usually work around the requirement. Again, an interest only Libor mortgage is not the right choice for everyone, but it can be a very effective choice for some individuals. Please give me a call or send an email and I will be happy to discuss this alternative with you. An example of how powerful this tool can be: If you want to make the comparison for your own specific
situation, calculators to find the
amortizing payment are available on this website. The math to find the interest
only libor mortgage payment is, Loan Amount x Interest Rate / 12. Of all of the interest only libor mortgage products available, the Cash Flow Interest Only Libor Mortgage offers the greatest flexibility by far. I have just developed a short PowerPoint presentation in .pdf format on these products, some real world examples, and some suggestions on how best to use them available by email I have an article "Buying your home in 2008" by email explaining negotiating strategy in today's market. 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. New! View my Wealthbuilder presentation and learn the safe way to manage your debt and fund your retirement. I hope the information on this page was useful to you. Please scroll down to view my Mortgage Market Guide. It is a weekly publication explaining the financial markets from a consumer's perspective that is available on this website or by email subscription. I have nearly 8,000 subscribers today and would be happy to have you as well. Your email address will never be used for any other purpose.
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