10 Year Interest-Only 3/1 ARM
Here we look at a 3/1 ARM with a 10 year interest-only period. The interest rate is fixed for the first 3 years and adjusts annually thereafter. The borrower has the option of making interest-only payments for the first 10 years. Even in a rising interest rate scenario the initial payment shock is lessened since the borrower still has the option of making interest-only payments for 7 years after the first rate adjustment.
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When you press the Calculate button you'll see the results for the stable and worst case interest rate scenarios. After 3 years the minimum monthly payment jumps 30% to $1,349 under the worst case scenario while the payments remain interest-only. After 10 years, the mortgage is fully amortized causing the minimum payments to rise 35% and 9%, respectively under the stable and worst case interest rates. Click on the Calculate button in the form below to generate the results or enter your own information.
Fixed-Rate Interest-Only Mortgages:
30 Year Fixed Interest-Only Mortgage 20 Year Fixed Interest-Only Mortgage
Interest-Only ARMs With Interest-Only Periods Matching Fixed-Rate Period:
Interest-Only 3/1 ARM Interest-Only 5/1 ARM Interest Only 7/1 ARM
Interest-Only 10/1 ARM
Interest-Only ARMs With Interest Only Periods Longer Than Fixed-Rate Period:
3/1 ARM (10 Year Interest-Only Period) 5/1 ARM (10 Year Interest-Only Period)
7/1 ARM (10 Year Interest-Only Period)
