Interest Only Mortgages

Interest only mortgages do not include any repayment of the principal portion of the loan for an agreed upon period of time . called the interest only period. This means that during that time, your monthly payment will consist only of interest. No portion of the payment will go toward the principal balance. At the end of the specified interest only period, your monthly payments will increase to reflect the full amortized amount owed to the lender for the remaining years of the loan. You might consider an interest only mortgage if you: Want to afford more home now. Know you will need to sell your home within a relatively short time period (maybe two to five years). Want a lower initial payment and have confidence that you can deal with a payment increase in the future.

Interest Only 30-Year Fixed

This fixed-rate interest only mortgage has an interest rate constant for 360 months. The first 180 payments will be based on the interest rate and loan balance, and payments will be calculated to pay only the accruing monthly interest. Starting with the 181st payment, the monthly loan payment will consist of principal and interest.

Interest Only 6/3 Prime ARM

This ARM program has an interest only payment period of 10 years. The first 120 payments will be calculated to pay only the accruing monthly interest based on the interest rate in effect. The first 6 interest-only payments will be based on the Initial Interest Rate. Thereafter the monthly payment can increase or decrease every 3 months as determined by the index and the margin. At the conclusion of the interest only period, the payment will be calculated to pay off principal plus interest over the remaining term of the loan.

Interest Only 7 and 10 Year ARM's

These mortgages maintain an initial interest rate for 7 or 10 years, and can be adjusted every year thereafter based on the applicable index. Initial payments will be calculated to pay only the accruing monthly interest at the Initial Interest Rate. After the applicable adjustment period the monthly loan payments will consist of principal and interest.