The Five Year Fixed Rate Interest Only Jumbo Mortgage
This program allows for interest
only payments for the first five years of the loan term. After the interest
only period, the payment is adjusted to provide amortization of the balance.
The loan provides for a smaller initial payment to the Borrower at the onset.
payments are interest only for the first 60 months, 5 years. After the
completion of the interest only period, the unpaid balance is fully
amortized over the remaining term of the loan. 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. The maximum adjustment usually at the first
adjustment date is 2%; thereafter, the interest rate will change annually.
Any additional payment is applied
towards principal. Using an interest-only mortgage keeps your monthly payments
down until you can afford the higher monthly payments of a fully amortizing
mortgage. Because you're putting off repaying the principal you will end up
paying more interest and more in total for your mortgage over the term. Other
options include 3 Year Interest Only, 7 Year Interest Only, 10 Year Interest
Only and 30 Year Fixed with Interest Only for first ten years.