Interest Only Loans..?

Bay Area
1

I am planning to refinance my mortgage with an interest only loan. Does anyone know banks/brokers that may provide it…? Charles Schwab Bank provides interest only loans, but I do not qualify the tough requirements. Please share…

Thanks
…mottai

2

I do not qualify the tough requirements.

What are the tough requirements? Which one you failed to meet? zero down payment you are expecting?

The reason for above question: Union Bank provides interest only, but they follow Fannie Mae rules. If you failed to meet one of the Fannie Mae rules, then UB is not the choice.

3

Hey there @mottai,

I just checked with my mortgage contact, Tracie, and she said she does have interest only loans but for 5 and 7 year ARMs only. Again disclaimer is necessary: your own specific situation and eligibility will differ from other folks. On rates, dep on loan amount , LTV and credit score. Generally, need 25% down, LTV 75%, min credit 740. Assuming you meet all this, rates are around 3.375 to 3.5 for 5 or 7 yr ARM, interest only. No points, but pay closing fees (est 2.8k - 3.3k, dep on loan amt).

PM me for contact info if this appeals to you.

4

@sfdragonboy and @Jil, Thanks a lot for your responses.

Schwab requires you to have 50% of liquid assets for any mortgage with interest only. So if you take a loan for 500K, they expect you to show liquid assets for $250K. This is apart from the other requirements like 65% LTV, 40% DTI and a higher credit score.

Here are the rates I got so far…

  • 2.875% 5/1 ARM Interest Only at no cost with Everbank.
  • 2.875% 5/1 ARM Interest Only with a mortgage broker with no cost and a $2K credit. This requires to open a checking account with a new financial institution and have automatic payments.
  • 2.625% 5/1 ARM Interest Only with Charles Schwab with 1 point and closing cost of 5K. In the last week of September, their rate with 1 point was 2.375%. Unfortunately I do not qualify.

I am hoping the rates fall as we had a disappointing jobs report last Friday. My intent is to have the lowest monthly payment as much as possible.

@Jil I will check with Union Bank to see if they have reduced rates,
@sfdragonboy I currently have better rates, so may not need the help of your mortgage contact.

Thanks folks…
…mottai

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