Interest Only Mortgages are gaining in popularity and allow consumers to pay Interest Only payments for a defined period. These programs offer greater purchasing power, an increase in cashflow, as well as a number of other benefits. Consumers should beware that these type of mortgage loan programs are not for everyone due to the associated risks. But, if a consumer is disciplined, understands the time frames involved, as well as fully understanding the potential risks, then they may be a good candidate for this type of program. This documentation will cover options for Interest Only LIBOR Mortgages. LIBOR reflects the world economic condition. LIBOR assists international investors with matching their cost of lending to their cost of funds. This is the rate of interest at which banks borrow from other banks in the London Interbank Market.
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About Interest Only LIBOR Mortgages
What Options/Loans Programs are Available for Interest Only LIBOR Mortgages?
• One Month LIBOR Loans – The interest rate for this option is the sum of the LIBOR index plus a margin which is rounded to the nearest one-eighth of one percentage point (0.125%). Margin will not change during the term of the loan; however, the index value will be adjusted every month and by doing so will cause the interest rate to be accordingly adjusted. Interest Only payments are typically effective for the first five or ten years of the note.
• Six Month LIBOR Loans – All the same criteria shown just above applies and is the same EXCEPT that: the index value will be adjusted every six months.
• One Year LIBOR Loans – All the same criteria shown just above applies and is the same EXCEPT that: the index value will be adjusted annually.
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What OTHER Options/Loans Programs are Available for Interest Only “LIBOR-Indexed” Mortgages?
3 Year Interest Only ARM Program
5 Year Interest Only ARM Program
7 Year Interest Only ARM Program
10 Year Interest Only ARM Program
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