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Can someone go over the benefits of an interest only mortgage? Does it make sense if I plan on selling in the next 5-7 years?

by logan.m322 from King Ferry, New York. Jul 27th 2016 Reply


Scott Fix (ScottFix)
#1330 ranked lender in California - 184 contributions

Great Question Logan. So, as you are well aware, if the note is for interest only, the principle amount will not decrease whatsoever. In the event of an economic downturn, what is to say that your home will be worth more than it is today, or worse yet, worth LESS than it is today when its time to sell in 5 to 7 years. Additionally, with interest rates at an all time low, why not utilize the opportunity to pay towards principle with a conventional or FHA mortgage. Here is a link to go to so you can enter the interest only product at which ever rate you were quoted vs a conv or FHA product. http://www.hughcalc.org/intonly.cgi Also, remember if you are at 80% LTV or more, you will have MI with a conv loan and for the life of an FHA loan. FHA is now at 3.25 to 3.5 in New York. **** Now for the Best Bet ****** Find a few local loan professionals to consult. Ask for recommendations from family, friends and co-workers who have recently purchased or refinanced. Shop your loan advisor, and shop your rates and loan products. All the best, Scott.

Jul 27th 2016
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Claudio "Paul" Williams (cwilliams.rhfunding)
#69 ranked lender in New York - 4 contributions

Yes, it makes sense. And mostly if you plan to move out in that time period. As well as you can apply for a 5/25 or 7/23 hybrid. Which means you can have a low interest rate, but for 5 or 7 years will be fixed and will amortize that loan. After that it will convert to an adjustable but, hopefully you will sell, payoff the mortgage and move out by then.Call me if you like at (914) 393-9600, (203) 391-8017 or at my office (516) 481-5050Thank you! Claudio "Paul" Williams. NMLS ID#: 7734

Jul 27th 2016
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William J Acres (William_Acres)
#2 ranked lender in Arizona - 7,933 contributions

"Interest Only" loans are exactly that.. you are not making any payments that go towards the principle, so you're only paying the accrued interest each month.. I/O loans are a "non-conforming" loan product, meaning that they are not underwritten to match a "Conforming" or standardized set of guidelines... You cannot get a Fannie Mae or Freddie Mac (conventional ) I/O loan.. FHA, VA and USDA also do not offer these loans either.. They are only offered through a portfolio lender.. and in all reality.. the interest rate will be higher in I/O loans, so you might get a slightly lower interest, but you're paying much more interest.. the better option would be to do a 5/1 or 7/1 ARM.. Under this loan.. you get the lowest rates offered and the rate is fixed for the initial 5 or 7 year period.. And since it's a fully amortized loan, you' re actually paying towards your balance each month as well.. With this loan product, your payment will be lower than an I/O loan.. And as Scott pointed out.. Rates are at an all time low.. why not take advantage of that while you can.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com NMLS# 226347

Jul 28th 2016
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