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Interest Only Mortgage |
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Lowest rates from over 50 lenders displayed:
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| Loan Name |
Rate |
Pts |
APR* |
As of |
| IO Year 7 |
5.375% |
2.9 |
5.63% |
2007-09-19 |
| IO Year 10 |
5.5% |
2.9 |
5.76% |
2007-09-19 |
| IO Year 15/30 |
5.62% |
2.0 |
5.87% |
2007-09-19 |
| IO Year 10/30 |
5.5% |
2.0 |
5.76% |
2007-09-19 |
| IO Year 5 |
5.25% |
2.5 |
5.5% |
2007-09-19 |
| IO Year 3 |
5.375% |
2.5 |
5.64% |
2007-09-19 |
| Stated IO Year 10 |
6.0% |
2.75 |
6.25% |
2007-09-19 |
| Stated IO Year 10/30 |
5.75% |
2.0 |
6.01% |
2007-09-19 |
| Stated IO Year 15/30 |
5.75% |
3.0 |
6.0% |
2007-09-19 |
| Stated IO Year 3 |
5.25% |
3.0 |
5.51% |
2007-09-19 |
| Stated IO Year 5 |
5.5% |
3.0 |
5.75% |
2007-09-19 |
| Stated IO Year 7 |
4.87% |
3.0 |
5.13% |
2007-09-19 |
| Jumbo IO Year 10/30 |
6.75% |
2.0 |
7.01% |
2007-09-19 |
| Jumbo IO Year 5 |
6.5% |
2.0 |
6.75% |
2007-09-19 |
| Jumbo IO Year 7 |
6.625% |
2.0 |
6.89% |
2007-09-19 |
Interest-Only Mortgage Rates Two loan programs that are popular are the 3 Year Interest Only Mortgageand 10/30 Year Interest Only Mortgage.
The 3 Year Interest Only Mortgage is popular because it allows you to fix the rate for the first three years of the mortgage. The interest rates are incredibly low, oftentimes in the 3% range, and there are caps on these mortgages so the interest rate can only increase up to a maximum of 5% or 6% above the starting rate. A great program for the borrower looking to minimize the monthly payment while still securing a fixed rate on your interest and not risking negative amortization. Also, the interest only mortgages typically come without a prepayment penalty so you can refinance later if you think the rates are rising too quickly. 3 Year Interest-Only Mortgage
The 10/30 Year Interest Only Mortgage is popular for borrowers looking for fixed payments for 30 years, but who want the interest only feature on the mortgage so that their overall payment will decrease. With the 10/30 interest only mortgage, the first 10 years of the mortgage are interest only, and the last 20 are principal and interest so you end up paying off the entire mortgage in 30 years. This program provides low monthly payments, and maximum stability. Some borrowers are eligible for a no closing cost loan, which means you get lower monthly payments with no upfront costs. Note that the 10/30 Year interest only mortgage typically carries a slightly higher rate than the regular 30 year fixed, but the monthly payments are still as much as 35% lower. 10/30 Year Interest-Only Mortgage
Here's an example: Let’s say you are looking to buy a house and you think that the 3 year interest only mortgage provides the right match to your needs for low monthly payments and you are comfortable with the 3 year fixed rate period. If you are buying a house for $100,000, and your interest rate is 6.0% on a regular 30 year fixed , your interest rate on a 3 year interest only mortgage might be 4.0%. The payment for the regular 30 year fixed, not including taxes and insurance, would be $599.55 but your payment for the 3 year interest only mortgage would be $333.33 per month. A savings of almost 45% off the regular 30 year fixed payment. Add to that the tax benefits of owning a home, which can be calculated by taking your total annual payments on the 3 year interest only mortgage and calculating how much in taxes you would save if you didn’t have to pay taxes on that amount of income. So, if your monthly payment is $333.33 and your annual payment is $3,996, that’s $3996 of annual income that you don’t have to pay taxes on. If you are in the 40% tax bracket, then that’s $1,600 of savings per year on your tax bill, or $133.33 per month of tax benefits. Subtract $133.33 from your monthly payment of $333.33 and you have a $200.00 monthly payment for your $100,000 new house, including the tax benefits but not including taxes and insurance.
Use our interest only mortgage calculator to approximate your monthly payments.
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