Interest Only Mortgages

Everything old is new again.  If you don't believe that look at the hip huggers and wide belts back in style and so are INTEREST ONLY MORTGAGES.  However they are new and improved!

An interest only mortgage is a mortgage that allows you to make just the interest payment every month which reduces your monthly payment by the principle you would pay on a fully amortized loan.  The difference between an interest only payment and fully amortized payment can be significant.  For example: $150,000 @ 6% 30yr fixed is $895.00.  The interest only payment would be $750.00.  The larger the loan amount the greater the difference.  For example $300,000 30yr fixed @ 6% is $1,789.70. Interest only would be $1,500.

Interest only mortgage's can make sense in Portland because our real estate market has become accustomed to experiencing appreciation.  Using a conservative an appreciation percentage of 2.5% a home valued at $200,000 would go up in value $5,000 per year in appreciation alone.  If you do a fully amortized 30 year loan on a $200,000 home at 6% the principle reduction per year would be $2,316…

The advantage of the INTEREST ONLY MORTGAGE is it puts you in control of your finances.  You are given the option of making the interest only payment or fully amortized every month.  That little bit of cash could help to reign in a credit card or build a deck. The beauty is it's up to you.

The draw back to the interest only is that you will not pay down the principle however like I discussed above is quite possible that the market appreciation will take care of that for you any way.

There are numerous ways to structure the interest only mortgages.  30 fixed or interim ARM loans like the 10-7-5-3 one arms or ever the monthly adjustable.

The INTEREST ONLY MORTGAGE isn't for everyone but if you are interested and would like more information please call me I would love the opportunity explore the option with you!!