Interest Only Loans
Interest Only Mortgages - Are They Right For You?

Current Interest Only Rate Quotes

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Current Mortgage Rates Interest Only Mortgage Rates- PA Interest Only Mortgage Rates- Hawaii Interest Only Mortgage Rates- Alaska West Virginia Interest Only Mortgage Rates Virginia Interest Only Mortgage Rates District of Columbia Interest Only Mortgage Rates Maryland Interest Only Mortgage Rates Delaware Interest Only Mortgage Rates New Jersey Interest Only Mortgage Rates Connecticut Interest Only Mortgage Rates Rhode Island Interest Only Mortgage Rates Massachusetts Interest Only Mortgage Rates New Hampshire Interest Only Mortgage Rates Vermont Interest Only Mortgage Rates New Hampshire Interest Only Mortgage Rates Maine Current Interest Only Mortgage Rates Vermont Interest Only Mortgage Rates Interest Only Mortgage Rates- New York Interest Only Mortgage Rates- Michigan Interest Only Mortgage Rates - Wisconsin Interest Only Mortgage Rates- MINNESOTA OHIO-Interest Only Mortgage Rates Interest Only Mortgage Rates- Kentucky Interest Only Mortgage Rates- Indiana ILLINOIS - Interest Only Mortgage Rates Interest Only Mortgage Rates- Iowa MISSOURI-Interest Only Mortgage Rates Interest Only Mortgage Rates- North Carolina South Carolina Interest Only Mortgage Rates Interest Only Mortgage Rates- Florida Interest Only Mortgage Rates- Georgia Interest Only Mortgage Rates- Tennessee Alabama - Interest Only Mortgage Rates Interest Only Mortgage Rates- Mississippi Interest Only Mortgage Rates- Louisiana Interest Only Mortgage Rates- Arkansas Interest Only Mortgage Rates- Oklahoma Interest Only Mortgage Rates- TEXAS Interest Only Mortgage Rates- New Mexico Interest Only Mortgage Rates- Arizona Interest Only Mortgage Rates- Kansas Interest Only Mortgage Rates- Nebraska Interest Only Mortgage Rates- Colorado Interest Only Mortgage Rates- Wyoming South Dakota Interest Only Mortgage Rates Interest Only Mortgage Rates- North Dakota Current Rates - Montana Idaho Current Rates Washington Interest Only Mortgage Rates Interest Only Mortgage Rates- Oregon Interest Only Mortgage Rates- Utah Interest Only Mortgage Rates- Nevada Interest Only Mortgage Rates- California

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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.

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 = $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.

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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:

  • The borrower pays interest only during the inital fixed period term (5 years). The unpaid balance is then fully amortized over the remaining term of the loan as an adjustable rate mortgage.
  • 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 upaid balance.
  • The borrower is qualified using the full P & I for the loan (even though the borrower's payments will be for interest only).
  • 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.
  • 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.
  • Margin: 2.250 to 3.000
  • 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.
  • 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.
  • Conversion Option is available on some Interest Only programs.

Interest Only Mortgage Lenders Ready

Current Interest Only Rate Quotes

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Interest Only Mortgage Rates- PA Interest Only Mortgage Rates- Hawaii Interest Only Mortgage Rates- Alaska West Virginia Interest Only Mortgage Rates Virginia Interest Only Mortgage Rates District of Columbia Interest Only Mortgage Rates Maryland Interest Only Mortgage Rates Delaware Interest Only Mortgage Rates New Jersey Interest Only Mortgage Rates Connecticut Interest Only Mortgage Rates Rhode Island Interest Only Mortgage Rates Massachusetts Interest Only Mortgage Rates New Hampshire Interest Only Mortgage Rates Vermont Interest Only Mortgage Rates New Hampshire Interest Only Mortgage Rates Maine Current Interest Only Mortgage Rates Vermont Interest Only Mortgage Rates Interest Only Mortgage Rates- New York Interest Only Mortgage Rates- Michigan Interest Only Mortgage Rates - Wisconsin Interest Only Mortgage Rates- MINNESOTA OHIO-Interest Only Mortgage Rates Interest Only Mortgage Rates- Kentucky Interest Only Mortgage Rates- Indiana ILLINOIS - Interest Only Mortgage Rates Interest Only Mortgage Rates- Iowa MISSOURI-Interest Only Mortgage Rates Interest Only Mortgage Rates- North Carolina South Carolina Interest Only Mortgage Rates Interest Only Mortgage Rates- Florida Interest Only Mortgage Rates- Georgia Interest Only Mortgage Rates- Tennessee Alabama - Interest Only Mortgage Rates Interest Only Mortgage Rates- Mississippi Interest Only Mortgage Rates- Louisiana Interest Only Mortgage Rates- Arkansas Interest Only Mortgage Rates- Oklahoma Interest Only Mortgage Rates- TEXAS Interest Only Mortgage Rates- New Mexico Interest Only Mortgage Rates- Arizona Interest Only Mortgage Rates- Kansas Interest Only Mortgage Rates- Nebraska Interest Only Mortgage Rates- Colorado Interest Only Mortgage Rates- Wyoming South Dakota Interest Only Mortgage Rates Interest Only Mortgage Rates- North Dakota Current Rates - Montana Idaho Current Rates Washington Interest Only Mortgage Rates Interest Only Mortgage Rates- Oregon Interest Only Mortgage Rates- Utah Interest Only Mortgage Rates- Nevada Interest Only Mortgage Rates- California

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Home Buyers Turning to Interest-Only Loans


Are interest-only mortgages a good deal?

Many home buyers are turning to mortgages with interest-only payment schedules so they can afford to buy a more expensive home. These mortgages have lower monthly payments, which makes qualifying easier. But the lower payments don't last forever, and interest-only loans aren't for everyone.

Mortgages with an interest-only payment feature come in many varieties. Basically, they work like this. The borrower pays interest-only payments for the first five, 10 or 15 years. The monthly payments are lower than they would be with a fully amortized loan during this initial period. However, at the end of the interest-only payment period, the borrower still owes the entire amount borrowed.

With a fully amortized loan, part of each monthly payment pays back a portion of the principal (the amount borrowed). A fully amortized payment schedule pays back the loan in full during the term of the loan, which is usually 30 years. At the end of 30 years, you owe nothing.

Interest-only is a bit of a misnomer. You ultimately have to repay the amount you borrow, so you won't make interest-only payments indefinitely. After the initial interest-only period, the principal is amortized over the remaining loan term. With a 30-year mortgage that has a 5-year interest-only payment plan, the principal will be amortized over the remaining 25 years of the loan. A shorter amortization period requires the borrower to make a higher monthly payment in order to repay the loan more quickly. This means an increase in the monthly payment starting with year six of the loan.

For example, if you were to borrow $250,000 at 6 percent, using a 30-year fixed-rate mortgage, your monthly payment would be $1,499. On the other hand, if you borrowed $250,000 at 6 percent, using a 30-year mortgage with a 5-year interest-only payment plan, your monthly payment initially would be $1,250. This saves you $249 per month or $2,987 a year. However, when you reach year six, your monthly payments will jump to $1,611, or $361 more per month. Hopefully, your income will have jumped accordingly to support the higher payments.

Mortgages with interest-only payment options may save you money in the short-run, but they actually cost more over the 30-year term of the loan. However, most borrowers repay their mortgages well before the end of the full 30-year loan term.

A mortgage with an interest-only payment schedule makes sense for some borrowers and is potentially risky for others. Borrowers who are counting on home-price appreciation to build equity could find themselves in a financial bind if home prices should drop and, for whatever reason, they're forced to sell.

Not all interest-only mortgages have a fixed interest rate. Some have one rate for the initial interest-only period and a higher rate—with a much larger monthly payment—for the remainder of the loan term. Others resemble adjustable-rate mortgages (ARMs). A popular variety has a fixed rate with interest-only payments for the first five years. Then it converts to a 1-year ARM. You could face serious payment shock if interest rates rose significantly during the first five years.

Borrowers with sporadic incomes can benefit from interest-only mortgages. This is particularly the case if the mortgage is one that permits the borrower to pay more than interest-only. In this case, the borrower can pay interest-only during lean times and use bonuses or income spurts to pay down the principal.

THE CLOSING: If you're planning to use a mortgage with an interest-only payment plan, and this is the only way you can qualify, make sure you'll be able to afford to keep your home when the higher monthly payments kick in.

Copyright 2004 Dian Hymer
Distributed by Inman News

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Current Interest Only Rate Quotes

Just One Click = Today's Rate Chart

Interest Only Mortgage Rates- PA Interest Only Mortgage Rates- Hawaii Interest Only Mortgage Rates- Alaska West Virginia Interest Only Mortgage Rates Virginia Interest Only Mortgage Rates District of Columbia Interest Only Mortgage Rates Maryland Interest Only Mortgage Rates Delaware Interest Only Mortgage Rates New Jersey Interest Only Mortgage Rates Connecticut Interest Only Mortgage Rates Rhode Island Interest Only Mortgage Rates Massachusetts Interest Only Mortgage Rates New Hampshire Interest Only Mortgage Rates Vermont Interest Only Mortgage Rates New Hampshire Interest Only Mortgage Rates Maine Current Interest Only Mortgage Rates Vermont Interest Only Mortgage Rates Interest Only Mortgage Rates- New York Interest Only Mortgage Rates- Michigan Interest Only Mortgage Rates - Wisconsin Interest Only Mortgage Rates- MINNESOTA OHIO-Interest Only Mortgage Rates Interest Only Mortgage Rates- Kentucky Interest Only Mortgage Rates- Indiana ILLINOIS - Interest Only Mortgage Rates Interest Only Mortgage Rates- Iowa MISSOURI-Interest Only Mortgage Rates Interest Only Mortgage Rates- North Carolina South Carolina Interest Only Mortgage Rates Interest Only Mortgage Rates- Florida Interest Only Mortgage Rates- Georgia Interest Only Mortgage Rates- Tennessee Alabama - Interest Only Mortgage Rates Interest Only Mortgage Rates- Mississippi Interest Only Mortgage Rates- Louisiana Interest Only Mortgage Rates- Arkansas Interest Only Mortgage Rates- Oklahoma Interest Only Mortgage Rates- TEXAS Interest Only Mortgage Rates- New Mexico Interest Only Mortgage Rates- Arizona Interest Only Mortgage Rates- Kansas Interest Only Mortgage Rates- Nebraska Interest Only Mortgage Rates- Colorado Interest Only Mortgage Rates- Wyoming South Dakota Interest Only Mortgage Rates Interest Only Mortgage Rates- North Dakota Current Rates - Montana Idaho Current Rates Washington Interest Only Mortgage Rates Interest Only Mortgage Rates- Oregon Interest Only Mortgage Rates- Utah Interest Only Mortgage Rates- Nevada Interest Only Mortgage Rates- California

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LIBOR: London Interbank Offered Rate

Libor History (1-year Libor)
  Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2020                        
2019                        
2018 2.107 2.267 2.502 2.663 2.770 2.718 2.764 2.828 2.840  2.919  3.084  3.120
2017 1.686 1.713 1.756 1.802 1.774 1.723 1.738 1.727 1.713 1.782 1.848  1.952
2016 1.178 1.140 1.179 1.210 1.230 1.337 1.230 1.432 1.557 1.552 1.575 1.639
2015 0.629 0.621 0.680 0.694 0.705 0.750 0.771 0.828 0.843 0.851 0.868 0.981
2014 0.583 0.565 0.553 0.558 0.549 0.534 0.545 0.580 0.566 0.580 0.554 0.565
2013 0.844 0.781 0.752 0.732 0.705 0.689 0.686 0.673 0.667 0.629 0.603 0.578
2012 1.128 1.096 1.060 1.049 1.047 1.069 1.068 1.054 1.032 0.973 0.876 0.860
2011 0.781 0.781 0.790 0.783 0.761 0.730 0.734 0.760 0.800 0.865 0.936 1.071
2010 0.984 0.846 0.839 0.920 1.016 1.204 1.173 1.037 0.843 0.778 0.762 0.787
2009 2.004 1.975 2.119 1.972 1.877 1.600 1.606 1.498 1.330 1.264 1.199 1.018
2008 4.224 2.849 2.709 2.486 3.079 3.164 3.311 3.253 3.207 3.963 3.174 2.766
2007 5.441 5.333 5.201 5.297 5.389 5.405 5.426 5.245 5.275 4.901 4.638 4.458
2006 4.941 5.153 5.248 5.422 5.414 5.766 5.591 5.450 5.299 5.335 5.244 5.314
2005 3.271 3.511 3.842 3.710 3.779 3.863 4.175 4.312 4.407 4.677 4.738 4.823
2004 1.461 1.365 1.340 1.808 2.076 2.468 2.463 2.300 2.445 2.529 2.961 3.100
2003 1.477 1.368 1.340 1.362 1.221 1.201 1.279 1.471 1.286 1.455 1.487 1.458
2002 2.420 2.496 3.006 2.613 2.634 2.251 2.070 1.943 1.813 1.664 1.705 1.447
2001 5.284 4.925 4.670 4.330 4.259 4.055 3.835 3.600 2.650 2.311 2.492 2.445
2000 6.659 6.760 6.970 6.964 7.453 7.214 7.047 6.978 6.811 6.725 6.618 5.997
1999 5.108 5.405 5.307 5.303 5.303 5.803 5.836 6.023 6.053 6.313 6.261 6.508
1998 5.774 5.836 5.914 6.024 5.930 5.940 5.897 5.648 5.186 4.865 5.244 5.213
1997 5.954 5.954 6.282 6.454 6.289 6.141 5.977 6.079 6.008 5.922 6.110 5.669
1996 5.196 5.274 5.704 5.829 5.977 6.172 6.243 6.055 5.985 5.719 5.696 5.789
1995 7.250 6.750 6.750 6.563 6.055 5.766 5.875 5.954 5.969 5.883 5.672 5.454
1994 3.703 4.344 4.750 5.250 5.516 5.828 5.828 5.813 6.188 6.563 7.078 7.750
1993 3.750 3.578 3.625 3.563 3.750 3.781 3.781 3.563 3.531 3.688 3.781 3.813
1992 4.625 4.750 5.063 4.703 4.750 4.375 3.750 3.750 3.375 3.938 4.141 4.078

Many libor loans have "Interest Only" payments available to them and are tied to the current rate of the Libor Index.

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