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Are Interest Only Jumbo Mortgage Rates Available?

By Bob Redtree

In recent years, the credit crunch has led to a drastic reduction in the amount of people who qualify for interest only mortgage financing. This is especially true for people who are looking for jumbo mortgages with balances over $417,000. Luckily, there are still ways a person could obtain interest only jumbo mortgage rates for their home purchase.

Put More Money Down

Putting more money down is the first way a person could still obtain interest only jumbo mortgage rates. The biggest concern with interest only rates is that the loan balance does not amortize, and equity will never increase. If housing price drop, this could lead to having an underwater mortgage. To counteract that lending concern, those looking for interest only jumbo mortgage rates will have to put forth a down payment in excess of 20%.

Pay Higher Rates

Paying a higher interest rate is the second way a person could still obtain interest only jumbo mortgage rates. Since jumbo mortgages are considered riskier investments, and less likely to be federally backed, banks are forced to charge higher interest rates to compensate for risk. Someone looking for an interest only jumbo mortgage will have to pay an even higher rate. In general, interest only jumbo mortgages rates will be up to 2% higher than traditional mortgage rates.

Shorter Term

Accepting a short term is the third way a person could still obtain interest only jumbo mortgage rates. Traditional mortgages are typically long term investments for banks with terms ranging from 15 to 30 years. Since they are not as attractive to mortgage lenders, interest only jumbo mortgages typically come with shorter terms, which could range from 3 to 5 years.

Related posts:

1. How Do I Get The Best Jumbo Mortgage Rate?
2. When Will Jumbo Mortgage Rates Get Better?
3. Why Are Jumbo Mortgage Rates So High?
4. What is a Jumbo Mortgage Loan?
5. How Will New Rules For Jumbo Mortgages Affect My Mortgage Rates