Mortgage Matters: Jumbo Loans - Pay Interest Only

Summary

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The newest and most popular loan product for 2005 has become the "interest-only" loan. These possibly are the best method of lowering payments on a jumbo loan. Offered by most lenders, they represent a useful vehicle to increase a homeowner's cash flow.

Interest-only loans have traditionally been limited to home equity loans. A minimum monthly payment of interest is required with principal reductions optional. Interest-only loans are now available for first mortgages either for a home purchase or a refinance of an existing loan and are particularly useful on loans over $359,650 (jumbo loans).

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Mortgage Matters: Jumbo Loans - Pay Interest Only

A $600,000 adjustable loan at 5 percent with the usual 30-year amortization results in a monthly payment of $3,220 per mont...

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