Interest Only loan Refinance

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ReFi to interest only loan
Posted by: wtj Aug 24 2004, 12:18 PM
Currently have 30 yr fixed @ 5.75%, we do not plan on remaining in our current home for more than 3-5 years. Currently have 200K in equity.

Goal: lower mo. payments as much as possible to leverage cash for other investments.

Considering: ReFi to interest only loan, @ 5 yr fixed rate…still have option to pay off principal w/ this loan as well. No closing costs, no fees assoc. to this loan whatsoever. It would give us flexibility to pay interest one month, then interest & principal every other month, giving us cash to leverage for other investments (rental prop/stock market/make larger payments to 401(k)/ROTH IRA retirement funds, etc.)

I really see a no loose situation in this one, but seeking other opinions? We are in CA and our housing market is hot (no, i cannot count on appreciation, but I am very confident nevertheless)…therefore even if we did interest only payments we still would be gaining additional equity on our home.

Let me know if you see any positive/negatives about this move? Again, it costs me nothing in closing costs etc., no prepayment penalties, and since we plan on moving in 3-5 years I feel it is the way to go.

Thank you for your time. Let me know if you need more info.
Posted by: loanuniverse Aug 24 2004, 02:39 PM
It sounds good.

The only thing that you did not mention was the rate. Are you getting 5.75% or better? If you are not that is a downside.

Another thing…. Are there any prepayment penalties?
Posted by: wtj Aug 24 2004, 05:41 PM
thanks, it is much lower than our current 5.75, about 4.75 roughly and no prepayment penalties…i try to research as much as possible, as often if it sounds too good to be try it just might be, but i think this is the way to go for us…i appreciate your time & response, this is a very helpful forum.
Author: Commercial Loan Underwriter