Interest First

Mortgage Products

Fixed

ARM

Reverse

Are you looking for lower monthly payments in the first years of your mortgage? With an InterestFirst^TM mortgage, you pay only the interest, taxes, and insurance in the beginning years of your mortgage, which means lower monthly payments. And, because the monthly payments are lower, you may qualify for a larger mortgage amount.

InterestFirst allows borrowers to make lower payments on a fixed-rate mortgage by offering an interest-only period during the early years of the loan, followed by a fully amortizing period. As a result, borrowers may qualify for a larger mortgage, or direct more of their cash flow in the first years of their mortgage to other investments or expenses. InterestFirst is intended for financially informed borrowers who are prepared for the increased mortgage payment when the loan converts to a fully amortizing payment.

Key Features:

InterestFirst is available to buy or refinance a 1-unit home that you will live in as your primary residence, or a second home.

With InterestFirst, you can select a 30-year fixed-rate mortgage, with an interest-only period of either 10 or 15 years. After the interest-only period ends, either in the 11th or 16th year, your monthly payment increases to include repayment of principal (the original loan amount) and interest. But by then, you have had many years of lower monthly payments and the ability to use your money for other expenses or investments.
InterestFirst ARMs can be originated with interest-only periods that match the initial fixed-period (3-, 5-, 7- or 10- years) or with a 10-year interest-only period. Your payment using the ARM option may even be lower than with the fixed-rate mortgage. And, the 10-year interest-only option will help to reduce the potential payment shock at the end of the initial interest rate period.
You can prepay principal at any time during the interest-only period -- for example, if you receive a bonus or increase in earnings. This reduces the future interest-only payments, since you would be paying interest on a lower principal amount. You can also prepay principal during the fully amortizing period. Although these prepayments do not change the scheduled payments or term, they let you pay off the mortgage sooner and thus pay less interest than originally scheduled.

Consumer Benefits

A low monthly payment during the interest-only period means more money to invest elsewhere
Achieve greater purchasing power, coupled with more cash management flexibility
Reduce future monthly payments without penalty when principal payments are made during the interest-only period

2006 Conforming Loan Limits

Number of
Units Maximum original
principal balance Alaska, Guam, Hawaii,
and U.S. Virgin Islands only

1 $417,000 $625,500

2 $533,850 $800,775

3 $645,300 $967,950

4 $801,950 $1,202,925

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