Interest Only Loans

Hey, I don’t know if this subject has been bantered yet or not, so please forgive me if it has. I have been hearing alot about the interest only loan. How exactly does this work?
If there is a thread already explaining this, please give me the link.
I appreciate all the help! :wink:

Lets say the you have 100K loan @ 6.50% interest only for 5 years. The loan is a 30 Year loan. Lets assume that the interest rate stays the same after the interest only period.
Your payment would be $541.66/mo during the interest only period. At the end of the interest only period you would begin paying back principal, but 5 years have already passed on your 30 year loan. You must now payback princiapal and interest over a 25 year period…your monthly payment would change to 675.20/mo

I see. Do alot of folks do this if they intend on holding a property long term? I am thinking that this would be a good deal if you were to unload it in 5 years or so…

If when the property is not quite up to snuff and needs some time to be stabalized its not such a bad way to go.

So is an interest only loan something that the conventional mortgage deals with or is it considered unconventional? What kind of non owner occupied investor rates can you get (best case scenario in terms of credit and DTI) can an investor get?

Ask me after Greenspan makes his annoucement later today.

Ha! 8) Ok Will do.