Interest Only Mortgage Payment
Interest only mortgage payment products can be an excellent choice for
Interest only mortgage payment products offer the lowest payment. Interest only mortgage
payment products mean you can buy more home, or if you are refinancing
into an interest only mortgage payment, 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. This is a significant difference from a fully amortizing
mortgage as extra payments do not change your payment at all.
Interest only mortgage payment products are available for a 30 or 40 year
term, with the first 5 or 10 years interest only (depending on the lender
selected) and the final 20 to 25 years fully
amortizing although I am now seeing many lenders offering this
option on Interest Only Mortgage Payment ARMs with fixed rate periods of 3, 5, and 7
years being the most common. At the end of the interest only period, your
mortgage will convert to fully amortizing for the remaining term. There will be
a payment increase at that time so you will want to select a product with the
longest interest only period available.
Reduced documentation Interest only mortgage payment loans are readily available as
Of all of the Interest Only Mortgage payment programs available, the
Flow Interest Only Mortgage Payment offers the greatest flexibility by far.
Interest only mortgage payment 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 an
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 an interest only mortgage payment 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
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 payment at 6%= $1250.00
Total Monthly savings= $248.88
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 simple interest payment is, Loan Amount x Interest Rate / 12.
have developed a PowerPoint presentation on
some real world examples, and some suggestions on how best to use them available
Read more about Interest Only
Mortgage payment Closing Costs