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| Interest Only - Jumbo 5/1 ARM |
| 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. |
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| The reduction in minimum payment is dramatic. |
Example:
Loan Amount: $500,000
Interest Rate: 5.75% (for example use only, not a rate quote)
Minimum monthly payments:
Interest (5.75%) Only = $2,395
Principal and Interest (5.75%) Mortgage = $2,917
Reduced monthly payment via Interest Only Mortgage= $522 |
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| 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. |
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| Common Interest Only Loan Details
(your loan may differ) |
| 30-year mortgage with an interest rate that adjusts according to the following program specifics: |
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The borrower pays interest only during the initial fixed period term (5 years). The unpaid balance is then fully amortized over the remaining term of the loan as an adjustable rate mortgage. |
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The borrower may make voluntary principal payments during the interest only period. The required interest only payment will be reduced to reflect the decrease in the principal unpaid balance. |
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The borrower is qualified using the full P & I for the loan (even though the borrower's payments will be for interest only). |
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Index is based on the average of Interbank Offered Rates for 1 year U.S. dollar-denominated deposits in the London Market (LIBOR), as published in the Wall Street Journal. The index rate used to calculate changes to the interest rate is the value available as of the first business day of the month prior to the date of adjustment. |
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Starting with the first interest rate adjustment on your loan, the Interest Rate will be based on the Index plus the Margin, rounded to the nearest one-eighth on one percentage point. |
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Margin: 2.250 to 3.000 |
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The interest rate cannot increase or decrease by more than 5 percentage points at the First Rate Change Date, and will not increase or decrease by more than 2.00 percentage points at any subsequent Rate Change Date. |
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Over the term of the loan, the Interest Rate cannot increase by more than 5.00 percentage points above the Initial Interest Rate or decrease to less than the Margin on your loan. |
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Conversion Option is available on some Interest Only programs. |
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