Interest-Only 7/1 ARM
A common interest-only adjustable rate mortgage is a 7/1 ARM with a 7 year interest only period. This type of loan may appeal to borrowers who plan to be in their home less than 7 years.
| Related Articles |
|---|
| » Refinancing to a Fixed Mortgage |
| » Interest-Only Mortgage Advice |
Assuming a stable interest rate index, when you press the Calculate button you'll see that after 7 years that the principal balance remains at the original loan amount while $12,469 per year has been paid in interest. At the beginning of year 8 the loan is fully amortized and if the index rate does not change the minimum monthly principal and interest payment will jump from $1,039 to $1,291 an increase of 24%. 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)
