Posted by Jasonrei on August 09, 2003 at 12:59:56:
Phillip, are you a loan broker here in Houston?
Interest Only Loans–1.95%!!? - Posted by Ben (OH)
Posted by Ben (OH) on August 08, 2003 at 16:32:46:
Do people have stories (good, bad) about interest only loans?
I’m into lease options and the key thing, after I’ve found a house that’s sufficiently below market, is paying as little as possible to the bank. I’d even go negative amortization for a short enough time period if I felt it would appreciate at an acceptable rate.
I know it’s pontentially very dangerous.
I’ve seen two forms: Prime + 0 interest only and COSI + 1% (12 month moving average/monthly adjustments) (COSI = cost of savings index, at 2.14% last I checked).
I’m sure there are others. I can see that with Prime at 4 and poised to go higher at some point, and 4 being historically VERY, aberationally, LOW–and it could shoot to 7-9% within a year if you look at norms even in the last few years–that could get ugly.
I’ve had two lenders offer 3.55% interest only rate (not sure what the index or adjustments to that product are), and I’ve seen mention of a 1.95% rate (again, I’m short on details).
I figure, there must be downsides (yes, multiple), but wondering if in my situation of 2-3 year term, it might work out.
Of course, use of such products are related to my goals and the time period for the L/O, yes, I understand all of that.
Just looking for some experiences and insight. Thanks.
Re: Interest Only Loans–1.95%!!? - Posted by Phillip
Posted by Phillip on August 08, 2003 at 21:03:17:
The 3.55% ARM is with 10.1% down no PMI or 2.75% ARM with PMI. The 1.95% is with 20% down. There are four options to pay with this loan.
- Payment based on an introductory start rate (1.95%) for the first 12 months.
2)Interest-only payment set up on a 30-year schedule
3)Payment based on a fully amortized 30-year loan.
4)Payment based on a fully amortized 15-year loan.
Right now margin + index is lower than what the interest only payment are. So, the interest only is not available at this time.
Investor loans add .4 to the start rate, index rate and cap rate.
This is a 5/1 adjustable rate reverse amortization loan. It is an excellent tool for improving cash flow, as it can lower your payments by at least 1/3. You should talk to your Loan Officer or Loan Broker for a proper presentation. Not all brokers or l/o’s are familiar with this program. Keep looking till you find one.
Phillip
L/O Houston
Re: Interest Only Loans–1.95%!!? - Posted by Todd H
Posted by Todd H on August 12, 2003 at 21:45:54:
I am located in NC and I have 4 rental properties all with about 30% equity in each property. I have spoke to several loan officers and they do not seem to be very knowledgable of investor loans especially those that are “interest only” or interst option payments. What I would like to do is refi each property and pull out some cash to go and buy 2 or 3 more properties. Do you recommend any loan officer that has a good understanding of this practice?
Todd
Re: Interest Only Loans–1.95%!!? - Posted by rm
Posted by rm on August 11, 2003 at 12:06:06:
Do you have a lender who offers this product?
Would it be possible to get some contact info?
Thanks a million.