Interest-Only Mortgage Rates
Interest-only mortgage rates are based on fixed rate payments. Some
interest-only mortgage rates are set on adjustable rate payments.
Whichever is the case, interest-only mortgage rates are always tied
to the libor index.
The libor index of interest-only mortgage rates stands for London
Interbank Offered Rate. LIBOR is the interest rate offered by a specific
group of banks in London for matured U.S. dollar deposits. Choosing
libor index as basis for your interest-only mortgage rates entitles
you to a number of benefits. Below is a short list of these interest-only
mortgage rate benefits.
Benefits of Interest-Only Mortgage Rates
Interest-only mortgage rates allow you greater purchasing power. Because
interest-only mortgage rates have lower costs compared to fixed rates
or other types of loans, you are afforded extra money which would
have been spent on high monthly payments. Interest-only mortgage rates
give you the chance to qualify for other loans, thus enabling you
to buy more home or real estate properties.
In an interest-only mortgage rate, your payment schedule is more flexible
compared to other loan types. Most lenders of interest-only mortgage
rates do not put any restrictions or penalties should you find it
convenient to start paying off the principal loan balance. Even with
prepayments, many interest-only mortgage rate lenders will still let
you pay up to 20% of your loan balance during any 12 month period
without prepayment penalties. This flexibility of interest-only mortgage
rates gives homebuyers more incentives in taking an interest-only
Interest-only mortgage rate also reduces the income you need to have
in order to qualify for a loan. Lenders allow borrowers to qualify
for an interest-only mortgage rate if the interest rate is fixed for
a period of three or more years.
Interest-only mortgage rates also provide the consumer an unlimited
cash flow. Other loans, like fixed rates often have restrictions on
how much a home buyer can “cash out” during refinancing. There are
cases where the desired amount is $300,000 but since fixed rate loans
only allow $150,000 to the borrower, bank try to charge higher rates.
With interest-only mortgage rates, there is no limit to the amount
of cash you can take. Interest-only mortgage rates were created for
the wealthy and savvy investor types.
Some lenders though put certain restrictions on the amount of cash
out an interest-only mortgage rate borrower can take. But even then,
interest-only mortgage rate programs are made available to borrowers
who want to avoid incurring penalties when taking large equity sums.
"A miser grows rich by seeming poor. An extravagant man grows poor by seeming rich.”
- William Shakespeare
Below are some interest-only mortgage rate programs made available
One Month Libor Loan – The interest-only mortgage rate of this loan
is the sum of the LIBOR index plus a margin of 0.125%. The margin
will remain fixed throughout the term of interest-only mortgage rate
loan. However, with the index value adjusted every month, your interest-only
mortgage rates may also be changed.
Six Month Libor Loan – Like the One Month Libor Loan, the interest-only
mortgage rate of this loan is the LIBOR index and margin which is
0.125%. The margin will only be adjusted every six months along with
the index value. This in turn would adjust your interest-only mortgage
rates every six months.
One Year Libor Loan – The interest-only mortgage rate of this loan
is the LIBOR index plus a margin of 0.125%. Every year, the interest-only
mortgage rate will adjust when the margin changes along with the index
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