Mortgage Scenarios

Jumbo Loans are mortgages with loan amounts which exceed the current Fannie Mae/Freddie Mac (FNMA/FHLMC) limit. Jumbo loans go to 1 Million Dollars and Super Jumbo loans are above 1 Million Dollars.

Conventional or Conforming loans are called this because the loan amount 'conform' to the maximum loan amounts which may be purchased in the secondary market. The buyer of these loans is the Federal National Mortgage Association (FNMA, or Fannie Mae) and the Federal Home Loan Mortgage Corp. (FHLMC, or Freddie Mac).

The old rule of thumb that you need to lower your Interest Rate by 2%, is more or less obsolete. For some people as little as a 1/2% drop in thier loan rate would be sufficient. This is a question with no definative answer. It is all relative. Foer some individuals a month savings of $100 is significant others need the savings to be higher. You must ask yourself if the monthly savings is significant to you.

Why should you consider an Interest Only Mortgage Loan? The short answer is the amount of money it will lower your monthly payment. Basically, it is intended to increase your monthly cash flow. Typically, an Interest Only Loan will have a payment about 26.5% less than a fully amortizing mortgage of the same interest rate. Since most Interest Only loans are based upon A.R.M.'s the rates are usually well below a comparable 30 Year Fixed Mortgages further reducing the monthly payment. Some Interest Only mortgages recalculate you monthly payment based upon your outstanding balance. This allows you to have additional principal payments effect your monthly payment immediately. Ask yourself, if only the interest portion of a mortgage payment (principal and interest) is tax deductible why do I want to pay down the principle portion of my mortgage? Amortizing a mortgage will gradually diminish my tax deduction. Could I better invest the principle portion of my mortgage payment? At what rate is my property appreciating? How long will I really live in this home?