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Interest-Only mortgage program, surprisingly, still available
The word is that the recent housing tragedy supposedly swept away from the surface of the planet all the highly creative mortgage products that were roundly blamed for some of the ensuing trouble. At least one of them has survived, though, the Interest-Only one. In it, only the interest portion is paid, with nothing going to the principal. It is drawing only scant attention nowadays, but it’s still around, offered at least by Fannie Mae. Its guidelines in this post-crash real estate era are quite restrictive which obviously makes it out of reach and unattractive to most home loan borrowers.
Let’s snap on the seat belts and take a moment now to go over the Fannie Mae product's main elements. FRMs – fixed rate mortgage – could be 30- or 40-year loans with the interest-only – IO - period for 10 or 15 years. Whereas the ARM – adjustable rate mortgage – looks different and is a bit confusing. The loan duration is 30 years and has a fixed mortgage interest rate for the first 3 years or more, then an IO period of 10 years after which the rate adjusts annually.
The eligible property type is ... more
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