"Fixed" Interest Only Mortgage
Hi-
My mortgage broker is offering a interesting option of a "fixed" interest only 1st and fixed and fully amortizing 2nd, not sure what to think, would like some opinions (this is for a buy & hold long term):
The 1st would be fixed for 30 years but interest only for the first 10 years. In order to still pay it off in 30, it will re-amortize in 10 years to a 20 year term. This will make the payment go up because it is recast in order to keep the payoff date. The goal with one of these is to pay off the 2nd mortgage 1st, ideally in ten years.
Thanks for your feedback!
d
[ Edited by d_random on Date 08/01/2007 ]
More than anything else, does it suit your needs?
Quote:On 2007-08-02 13:16, d_random wrote:
Thanks for sharing Dnvkid. I plan to do the same thing, pay down the 2nd in ten years. I wonder if this a good plan for a long term hold (rental) or would I be better off with a 30 yr fixed. You already have a 30-year fixed. Your mortgage interest rate will not change for the entire 30-year term of the first mortgage note.
The idea behind the interest only payments for the first 10 years is that you should pay off the second mortgage in full in that time. When the 10 year interest only period is up and the first becomes fully amortizing over the 20 years left in your loan term, you should not have any higher mortgage payment than you had in the 10 years when you were paying both the first and second.
Thanks for the clearification newkid. I guess I am wondering if a I/O mortgage which usually .25-.375% higher (than a regular amortization 30 yr fixed) is a good idea for a loan that I want to pay down quickly.
Good point, Thanks!
Finnig,
I agree. But I am dealing with broker who is insisting that because I have rental properties, I have to submit tax returns for all years I have owned the rentals.
Ever heard of this?
JS.