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| What is your margin when the fixed
rate is over? |
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This really depends on the
lender and the product offered. Variable rate
mortgages are based on a number of factors to
asses the lenders particular risk profile for
the program. What does this mean to you? It means
once your initial fixed rate period is over you
will be subject to the measured index of your
mortgage product plus a pre-defined margin. For
example, If you were to be coming out of a six
month libor loan today your rate would be much
lower than traditional fixed rate loans. The LIBOR
index is currently around 1.30 so if you had a
margin of (1.25%) you would have a current fully
indexed rate of 2.55% for your mortgage! Of course,
this rate will change monthly or annually. |
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| If you are looking for an Interest Only Loan to help you finance your home, contact us today to request a quote! |
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| What Index will my Interest Rate
be adjusted to? |
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Most Interest Only Loans
are tied to the LIBOR index - LIBOR is an abbreviation
for "London Interbank Offered Rate," and is the
interest rate offered by a specific group of London
banks for U.S. dollar deposits of a stated maturity
- however some are also tied to the one year CMT. |
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| Can I convert to a fixed rate? |
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Most Interest Only Loans
do not have fixed rate conversion options but
product features and guidelines change daily. |
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| Are these Balloon Mortgages? |
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No. Most Interest Only Loans
are not balloon type mortgages. Those that have
a longer initial fixed period such as the 3,5,7
and 10 year programs will not have the note due
and payable at the end of the fixed term. The
mortgage will simply turn into a fully amortized
loan thus your balance (after 5 years on a 5 year
fixed interest only loan) will be amortized over
the remaining 25 years as a normal 25 year "principal
and interest" mortgage would except at an adjustable
rate. |
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| Do Interest Only Loans have Prepayment
Penalties - If so, How do they work? |
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Most Interest Only Loans
do not have prepayment penalties however there
are certain advantages to taken a prepayment penalty.
The option will depend on your application profile
and the lender you choose but you may be able
to save up to 0.25% on the rate just by taking
a prepayment penalty for the first 3 years. |
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| How Does Interest Only Bank Loans
compare to my local bank? |
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IOBL is like having over
107 "Local Banks" to choose from without having
to do the leg work yourself. Often times banks
differ as to the types and sizes of loans they
would like to lend on. IOBL does all the leg work
for you by matching you up with the ideal lenders
for your individual situation. |
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| What happens when the initial fixed
term of my loan is over? |
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Typically when the initial
fixed term is completed, your new rate is determined
by taking the index plus your margin. For example
if your margin is 2.75% and your index is 1.75%,
your new fully indexed rate would be 4.00%. This
can then change monthly, bi-yearly or yearly depending
upon the loan you have choosen. |
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| What is the benefit of doing an
interest Only Loan versus a Principle and Interest Loan? |
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The beauty of doing an interest
only loan is that it puts the borrower in control
of how much principle is paid down while allowing
for a reduced monthly payment. When doing a principle
and interest loan, the bank determines how much
principle is applied each month to your loan balance
leaving the borrower with less options |
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| What happens if I decide to do
a 5/1 ARM and then two years into my loan I want more
security? |
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Just because you do a 3/1,
5/1 or 7/1 ARM does not mean you can not re-finance
before your fixed term is complete. Most Adjustable
Rate Mortgages do not have pre-payment penalties
and allow for borrowers to refinance at their
discretion. |
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| What happens if my monthly interest
only payment is $1,000.00 per month and I want to pay
more? |
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Any amount paid above and
beyond the minimum payment of $1,000.00 will go
directly towards paying down your principle. For
example, if you were to pay $2,000.00 ($1,000.00
above the minimum) for a single month then your
loan balance would decrease by $1,000.00 the following
month. |
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| If you are looking for an Interest Only Loan to help you finance your home, contact us today to request a quote! |
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| Pay Option Arms |
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| What is a Negative Amortization
Loan? |
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This is a deferred-interest
loan which is very powerful -- and the most misunderstood
mortgage program because of its many options.
Basically, the lender allows the borrower to make
monthly payments that are less than the accruing
interest. Therefore, if the borrower chooses to
make the minimum monthly payment, the loan balance
will increase by the amount of interest not paid
on the loan. The power of this loan lies in the
borrower's ability to choose between making the
full loan payment, or the minimum payment, or
any amount in between. If a borrower's income
varies throughout the year (due to commissions,
bonuses, etc.), the borrower can make a lower
payment during the "lean times", and then make
higher payments when funds are readily available. |
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| Why consider a MTA Cash Flow Arm? |
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There are many reasons a
home buyer may consider an MTA home loan. Each
reason being unique to the home buyer. An MTA
Cash Flow Arm is for:
- Debt Reduction: Monthly savings can be invested
or used to pay off credit cards or to start
or augment your savings and investments.
- Asset Accumulation: It is a good mortgage
if you have a need to accumulate more assets,
or the need to fund retirement accounts (higher
return on your investments).
- Self Employed Home Buyers: The MTA is a
good fit for home buyers who own their own
business, have a fluctuating income, or live
on commission.
- Jumbo Home Buyers: It has advantages for
jumbo home purchases (over $359,650 in value).
*MTA allows you to take out a larger mortgage
while still having manageable payments. Flexibility
in your monthly payment - you will have a
monthly choice of payment options.
- Financial Savvy Home Buyers: The MTA ARM
provides more opportunities for financially
savvy borrowers who seek more customized and
ultimately less costly home-finance choices.
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| If you are looking for an Interest Only Loan to help you finance your home, contact us today to request a quote! |
