News
ENLARGE
As we are all well aware in some parts of the country there are mortgage problems. Foreclosures have increased and so has the number of home owners who have mortgages that may be adjusting to higher rates. In those cases homeowners may see higher mortgage payments in the future.
Here is one option that just may be the best way for home owners to keep their homes, and in some cases lower their payments. There is no magic in what I have to tell you, in fact, these mortgages have been around for years and years. What I am talking about are interest-only mortgages.
Interest-only mortgages are very simple to explain, you borrow a certain amount of money, the interest rate is set at the time of the closing, and you, the homeowner pay only the interest due on the amount owed.
As an example, take the situation of Ms. Brooke Trout. Brooke owns a home here in the High Country and the home is valued at $600,000. The owner, Ms. Trout, owes $350,000 on the home. She wants to refinance to an interest-only mortgage with an interest rate of 4 percent. Based on the rate and amount owed her interest-only payment would be $1,167.00 a month. Now Ms. Trout will owe $350,000 when she signs the refinance documents and if she never puts in one more penny than the interest payment she will continue owing $350,000. Ms. Trout will not pay down any principal on the loan if she only makes the interest only payment.
Another thing to consider is when Ms. Trout is thinking about buying another home here in the High Country. With an interest-only mortgage her current home may cash flow better with the lower payment. She may still receive all the federal tax benefits (she would have to consult her tax advisor regarding potential tax benefits) of a fully amortized mortgage and she may still get all the appreciation in value if and when she sells the home, just like she would if the loan amortized.
Now, for all of you out there in an adjustable-rate mortgage and you are about to adjust, you may want to consider interest-only mortgages. If you are a landlord and your cash flow is not what you would like it to be you may want to consider Interest Only mortgages. If you plan to own that primary home, second home or Investment home for only a couple of years you may want to consider interest-only mortgages.
Interest-only mortgage options may not be best suited for your mortgage needs but you may want to meet with your friendly neighborhood mortgage professional to learn more about all your mortgage product options.
For answers to your mortgage related questions call Bob Kieber at (970) 453-4700 or email him at robertk@mymillenniumbank.com. Bob is a local mortgage lender with Millennium Bank. He has 30-plus years of professional experience in real estate, finance and investments, and is a longtime resident of the High Country. Member FDIC, Equal Housing Lender. NMLS Bank #477710 Broker #289610. For tax benefit information please consult with a professional tax advisor. The opinions expressed are those of the individual, and do not necessarily reflect those of Millennium Bank.
Here is one option that just may be the best way for home owners to keep their homes, and in some cases lower their payments. There is no magic in what I have to tell you, in fact, these mortgages have been around for years and years. What I am talking about are interest-only mortgages.
Interest-only mortgages are very simple to explain, you borrow a certain amount of money, the interest rate is set at the time of the closing, and you, the homeowner pay only the interest due on the amount owed.
As an example, take the situation of Ms. Brooke Trout. Brooke owns a home here in the High Country and the home is valued at $600,000. The owner, Ms. Trout, owes $350,000 on the home. She wants to refinance to an interest-only mortgage with an interest rate of 4 percent. Based on the rate and amount owed her interest-only payment would be $1,167.00 a month. Now Ms. Trout will owe $350,000 when she signs the refinance documents and if she never puts in one more penny than the interest payment she will continue owing $350,000. Ms. Trout will not pay down any principal on the loan if she only makes the interest only payment.
Another thing to consider is when Ms. Trout is thinking about buying another home here in the High Country. With an interest-only mortgage her current home may cash flow better with the lower payment. She may still receive all the federal tax benefits (she would have to consult her tax advisor regarding potential tax benefits) of a fully amortized mortgage and she may still get all the appreciation in value if and when she sells the home, just like she would if the loan amortized.
Now, for all of you out there in an adjustable-rate mortgage and you are about to adjust, you may want to consider interest-only mortgages. If you are a landlord and your cash flow is not what you would like it to be you may want to consider Interest Only mortgages. If you plan to own that primary home, second home or Investment home for only a couple of years you may want to consider interest-only mortgages.
Interest-only mortgage options may not be best suited for your mortgage needs but you may want to meet with your friendly neighborhood mortgage professional to learn more about all your mortgage product options.
For answers to your mortgage related questions call Bob Kieber at (970) 453-4700 or email him at robertk@mymillenniumbank.com. Bob is a local mortgage lender with Millennium Bank. He has 30-plus years of professional experience in real estate, finance and investments, and is a longtime resident of the High Country. Member FDIC, Equal Housing Lender. NMLS Bank #477710 Broker #289610. For tax benefit information please consult with a professional tax advisor. The opinions expressed are those of the individual, and do not necessarily reflect those of Millennium Bank.
