Interest
Only Mortgage Loans
Through years of mortgage and real
estate experience it has become more
apparent to many people that the
appreciation and tax benefits of real
estate is where financial wealth comes
from and not so much as to how much
principal balance someone pays down on a
mortgage. Real Estate has skyrocketed
over the last 25 years and it has become
harder for families to realize the dream
of owning a home. These loans not only
help you qualify for more home they will
allow you options that amortizing loans
do not.
The national average most people stay in
a home is between 5-7 years, why on
Earth would you take an amortizing 30
year fixed rate loan, I know, because
your parents did and their parents did
and so on. Let us try to give you some
insight on how these types of loans can
significantly change your cash flow
position, it is important to understand
that we are in no way telling you that
you will be saving money, we are
explaining with these types of loans you
will have options and can decide for
yourself how to use the principal
portion of your payment.
Here is an example of a $500,000 loan
comparing a 30 year fixed rate mortgage
to a 5/1 ARM Interest Only, assuming you
will move in 5 years, again the caveat
is if you do not move you will be
subject to the rates five years from now
and you may want to refinance. We will
take that into consideration also. The
rates quoted below are in no way an
offer of a mortgage; it is pure
speculation of a scenario that could
happen.
500K 30 year fixed rate jumbo mortgage
loan @ 5.875% - payment $2,957.69 per
month for 30 years. Your principal
balance will be $464,547.20 after 5
years; you paid down $35,453.00 or just
7% of the total loan balance in 5 years.
500K 5/1 ARM Interest Only mortgage @
4.875% - payment $2,031.25 per month for
5 years. This is $926.44 a month cash
flow position or $55,586.40 in 5 years
that you have created for yourself.
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