The Interest Only Loan

All of our ARM programs have available Interest Only options.

Interest Only Loans allow you the flexibility of investing your money where you wish, not just in your house. During the first five years of your loan you can either pay interest only, or include whatever amount of principal you wish, even a large principal prepayment if desired. After five years your loan will require monthly payments of both principal and interest.

The reduction in minimum payment is dramatic.

Example:

Loan Amount: $333,700
Interest Rate: 4.500% (for example use only, not a rate quote)
Minimum monthly payments:
Interest (4.50%) Only Mortgage = $1,251
Principal and Interest (4.50%) Mortgage = $1,691
Reduced monthly payment via Interest Only Mortgage= $440

Comparing this minimum payment of $1,251 against the higher rates that many homeowners currently have and the savings is even more pronounced:

Same scenario as above but current rate on existing Principal and Interest loan is 5.875%:

Monthly payment is $1,973.96.
Reduced monthly payment via Interest Only Mortgage = $723

Please be fully aware that with the Interest Only mortgages if you pay the minimum required amount (interest only) during the first five years your principal balance will not start reducing until year six when principal and interest payments start.