dcsimg

Should You Refinance To An Interest-Only Loan?

An interest-only refinance loan features an introductory interest-only period where you need only pay the monthly interest charge for your home loan. Availing yourself of this option every month does mean that your balance will not be paid down; however you can choose each month to only pay interest or to pay more and reduce your loan balance.

Once the interest-only period expires, your loan payment is recalculated based on the remaining balance, and term of the loan. Interest-only loans can work for you if you have made a clear plan to repay the loan and:
  • You have sufficient income even if it comes in sporadically -- like someone on commission or self-employed.
  • You have realistic expectations of earning significantly more in the future.
  • You have amassed enough equity to be able to refinance again if you can't make the higher fully-amortized payment.
Interest-only refinance loans are not a good option if:
  • You have no plan for making the fully-amortized payment if home values don't increase.
  • You have little to no equity in your home.
  • The interest-only option doesn't significantly affect your cash flow. Often, interest-only loans come with a slightly higher rate which negates some of the cash flow you would get by not paying on the principal.
 
 
Conforming Loans

Find current mortgage rates and local lenders for conforming home loans.  For a single family residence (in most states) this meansany new home loan under $417,000.

 
Conforming Loans - Get Today's Rates
 
 
Jumbo & Super Jumbo

Contact mortgage lenders and start comparing rates for home loans over $417,000.  From interest only to fixed rates, learn more about jumbo and super jumbo home loans today.

 
Get Jumbo & Super Jumbo Rates
 
 

Conforming Loan Limits - 2007

 

Every year, new loan limits are announced for home loans which may be purchased by the Federal National Mortgage Association (FNMA, or Fannie Mae) and the Federal Home Loan Mortgage Corporation (FHLMC, or Freddie Mac). These corporations are the two largest "secondary market" agencies - corporations that purchase closed loans from mortgage lenders.

  • 1 Family    -     $417,000 (same as 2006)

  • 2 Family    -     $533,850 (same as 2006)

  • 3 Family     -     $643,500 (same as 2006)

  • 4 Family     -     $801,950 (same as 2006)

These new limits are effective for home loans closed on or after January 1, 2007 and are the same as limits set for 2006.  The maximum loan amounts for one-to-four family mortgages in Alaska, Hawaii and the U.S. Virgin Islands are 50% higher than the limits for the rest of the country.  Conforming loans refer to loan sizes that 'conform' to the maximum loan amounts listed above.