just for the heck of it, I put in my info on that form on e-loan to see what they would recommend (I have a pretty good credit score). This is the result... an interest only loan for the first 5 years that becomes an ARM with full amortization... you see any obvious indication here that the payment is gone to go through the roof??? (btw, I refi'd a few years ago and my loan is now 30 year fixed at 5.6%)
5 year fixed rate
closing costs $8470
interest rate 5.375%
APR 7.046% (who on this board knows the difference between this and quotd "interest rate")
interest only
This is a combination fixed/adjustable rate product. The start rate of 5.375% is fixed for the first 60 month(s) of the loan's 30-year term.
At the end of the 60 month(s), the rate will adjust to the lower of:
1. The index plus the margin of 2.250%,
2. The previous rate plus 5.000%, or
3. The life cap of 10.375%.
Thereafter the product will adjust every 12 month(s) to the lower of:
1. The index plus the margin of 2.250%,
2. The previous rate plus a maximum periodic adjustment of 2.000%, or
3. The life cap of 10.375%.
The rate will always be rounded to the nearest one-eighth of one percentage point.
Required payments made during the first five (5) years of the loan will be applied towards interest only and will not reduce the principal balance during that period. However, at any time you may elect to repay a portion of the principal.
Beginning in year six (6), payments will be applied towards principal and interest.
During the period that you make payments of interest only, your payment will be based on the interest rate and loan balance. After that period, your payment will be based on the interest rate, loan balance, and remaining loan term.
This product does not have a prepayment penalty.
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