Interest Only Loans, Zero Down 100% Financing

Interest Only Loans

Interest Only loan products are an easy way to improve your cash flow and are a popular alternative to traditional mortgages. Interest Only loans allow you the flexibility of paying only the interest due on the mortgage rather than paying both interest and principal each month. Most of these loan products allow you to pay extra if you choose.

The benefits of Interest Only Loans:

You can choose to pay extra towards your loan balance, or simply pay the minimum required.
Interest Only Loans work well for borrowers that are on a restricted budget. Monthly payments on an Interest Only Loan can be as much as $300-400 per month less than a comparable traditional mortgage.
An Interest Only Loan may allow you to qualify for a bigger or more expensive home.
This type of loan can work well for people who only want to stay in a home for a few years. During the first few years of a traditional mortgage, most of your mortgage payment is being applied directly to the interest on the loan with very little being applied towards the principal balance. An Interest Only Loan will provide a lower payment and will have almost the same remaining loan balance as a traditional mortgage after 1-5 years.
Investors frequently use Interest Only Loans to help improve cash flow on rental properties.

As with any loan program, there are also downsides and risks involved with interest only loans:

Interest Only loan payments do not pay down the principal balance of your loan - you will still owe the same amount in 1, 5, or 15 years as the day you obtained the loan. If your property doesn't appreciate in value, you may have out of pocket costs if you choose to sell the home. While the likelihood of this happening is low, it is a risk that must be considered when thinking about using Interest Only Loans.
Most Interest Only products have a specified term. For example, on most 30 year fixed Interest Only Loans, most lenders allow interest payments for 10 years, and then you must repay the loan during the last 20 years. This loan is now amortized over a 20 year period, and the last 20 years will carry a higher payment than a traditional mortgage. Other Interest Only Loans require a balloon payment (you must pay off the entire balance) after a certain number of years.
These loans may not be a good long-term solution, so if you are planning on staying in your home for an extended period of time, you may want to consider a traditional product.

Ask your loan consultant if an interest only loan might be right for you.

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Zero Down 100% Financing

Zero Down 100% financing programs may be available for homeowners as well as investors. 100% financing is commonly used by borrowers that don't want to put down large amounts of money to purchase a property, first time homebuyers, investors, and homeowners that would like to refinance and convert the equity in their homes to cash that can be used for many purposes.

We have several different zero down 100% financing loan programs available. Whether you are looking to purchase a home, a vacation home, an investment property, or simply want to refinance your existing mortgage, one of our 100% programs may meet your needs.

We often use an 80/20 program to achieve 100% financing without the added cost of mortgage insurance. In an 80/20 program, you will receive two different loans - a first and a second mortgage. The interest rate on the first mortgage (80% of the loan balance) will be lower than the rate on the second mortgage (the remaining 20% of the loan balance). Your loan consultant will calculate your "blended rate" for you. This is the average cost of the interest taking into consideration the amounts and rates on both loans. You can choose to pay off your second loan at any time while keeping your first loan on the property.

100% Financing is often combined with interest only payments to achieve low out-of-pocket costs obtaining your loan as well as low monthly payments. This type of loan may not be right for everyone, but can increase cash flow in the right situation.

We may also have 100% financing loans for stated income purchasers - no tax returns or stacks of paperwork required! Ask your loan consultant for requirements and details.

As loana programs are constantly changing, please call for the most up to date information on available financing programs. Ask your loan consultant if zero down 100% financing may be right for you.

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