Does a interest only arm for a NOO at 100% financing exist?
You will really have to shop this one around as this loan represents a HUGE risk for the bank. Not only is it a NOO property but you are financing 100%, paying interest only, AND it’s an adjustable. All of these factors add to the layering of risk. When you do find a bank for this one (which will be tough I can tell you ahead of time) your rate will be pretty obscene. I would be sure that this deal or any future deals you may have in mind make good sense. The I/O payments, adjustable feature of the loan, and 0% down makes me unsure of what type of return you will get.
Thanks for the words. I got another reply on another board that said I could do a 80-20, where I pay interest only on the 80% and P&I on the 20%. Does this make more sense or is it at least more common?
The scenario you outlined does make sense, at least you would be paying down the principal on the second. But you are still looking at 100% financing, whether it’s in the form of 1 loan or broken up into 2. Keep in mind as well, that due to the loan size being much smaller on the second, your rate is going to be higher than on the first. But you do avoid PMI by breaking it up into an 80/20… So, to answer your question, this couldbe an option but it still represents quite a bit of risk.