Is there such thing as a 30 yr fixed rate mortgage that let’s you increase/decrease your payments if needed?
Written By: admin on January 1, 2010
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It’s comical to see people make uneducated responses. For those of you who knew what you were talking about thank you. FIXED rate giggles.
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Tags: fixed rate, fixed rates mortgageTags: fixed rate
Absolutely!
There is a 30 yr fixed rate pay option program. A few lenders carry this loan, as some have discontinued this product.
Wachovia is one of lenders (absorbed World Savings) that still carries this product.
The Fixed Rate Pick-a-Payment Mortgage gives you up to four different payment options each month—Minimum Payment, Interest Only, Full Principal and Interest, or 15-Year Payment Option.
With the Fixed Rate Pick-a-Payment, you could:
Make a lower monthly payment in the initial years and temporarily increase your cash flow so you can free up cash for:
Retirement savings
Paying down high-interest debt
Funding college tuition
Essential Living Expenses, etc..
Make higher payments and pay off your home loan sooner
Keep mortgage payments low during the initial years of your loan
Control your budget based on your individual financial needs
Delight in the predictability of a fixed rate
So……
Things to watch out for:
If you need to make that lower payment during a particular month (the minimum payment) then you will only be really making a part of the REAL payment. The remainder of the REAL payment that you did not pay will be added to your loan balance (negative amortization).
If your loan is $200,000 and your REAL payment is $1200 and you make the min. payment of say $700 then you will be adding the difference of $500 to your balance. So your new starting balance next month will be $200,500.
Also, if you continue to make this min. payment the lender will cut you off (eliminate the min payment option) at a predetermined value.
You can also make the interest only payment which is less than the REAL payment. As the options name suggests, you would only be paying the interest.
The third option is the traditional 30 yr P&I payment (Principal and Interest), the REAL payment.
The final option is the excellerated 15 yr P&I payment.
The rate will stay fixed for thirty but you will get a higher rate then you would a NON-Option loan.
If you need this loan because of seasonal income or something like that then sure, may be a excellent choice, but if you just want to buy more house than you can afford and want that lower payment, It’s temporary and the cause of a lot of foreclosures right now.
Be sure you can afford the house, and stay around 30-40% of your income dedicated to your home.
Excellent Luck