Living Large with a Lower Payment

Mortgage and Lending with The Mortgage Market of Delaware


Living Large with a Lower Payment

Yes, that’s right. You can purchase or refinance the home of your dreams and pay interest only for 10 years. You can choose to refinance at the 10 year mark, sell the home, or start paying the principal and interest payments for the remaining 20 years.

The beauty of this loan is that you pay less each month so you can use those funds to do whatever you wish. In an example of a $1,250,000 purchase with 20% down, the interest only payment is $3,750. On a regular principal and interest payment, the payment would be $5,067; a difference is $1,317.

Just think about what you could do with the extra $1,317 each month. Travel, a luxury car, redecorating your home, go back to school, purchase a recreational vehicle, add a pool in your back yard. The possibilities are endless.

One year gives you a total of $15,802. Ten years is a total of $158,022. That’s quite a lot.

And the very cool thing is while you are doing all kinds of things with the extra monthly money,  your home’s value is increasing. A general rule of thumb is to use 4% per year appreciation.

I’ll use 3% for this example.  On the original value of $1,250,000, the value at the ten year mark is $1,679,895. That is an increase of $429,850.

Using the 4% annual appreciation, the increase in value for ten years is $600,305 making the value $1,850,305.

This loan product is a fixed interest rate with a term of 30 years. Borrowers with a credit score of 700+ can qualify. 20% down is required. Borrowers will need to show 12 month’s assets in reserve. This loan can be done on primary and second homes. And they can be done as a purchase or a rate and term refinance.

This type of loan could be just the right fit for a lot of borrowers.  The first part of the year is a great time to reevaluate your housing situation. Why not check in with your trusted loan originator and see what this type of loan could do for you. 

Provided by JoAnn Moore, a Licensed Mortgage Loan Originator, NMLS #165477, Office 302.855.1305, Cell 302.236.1229. The Mortgage Market of Delaware.       

Posted by

JoAnn Moore

Comments (1)

Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

JoAnn, great information and who doesn't want a lower payment to enable more travel or remodeling!  

Feb 04, 2022 02:55 PM