Normally, homeowners in Atherton don't want a 15 year fixed rate because the payments are too high. Now there is a twist on a 15 year fixed rate that can keep your payment low!
This loan has a 40 year term. Initially it is a 15 year fixed rate. During the 15 year fixed rate term, the payments are interest-only. Because the payments are interest-only, the payment is a lot lower than an amortized 15 year fixed rate.
Here's the neat part - if you pay principal during the 15 year fixed rate term, the payment decreases because the payment is based on the reduced balance!
After the 15 year fixed rate term expires, the rate adjusts once. The rate is determined by adding .5% to the Fannie May 60 day rate.
The new payment is based on the new rate, amortized over 25 years. Hopefully you have paid off enough of the principal during the 15 year fixed rate period so that the payment doesn't increase! The new rate can't be more than 5% higher than the initial rate.
As you know, homes in Atherton are very expensive. This program works well here because the maximum loan amount is $5 million.
This loan program is available to purchase or refinance expensive homes, such as those located in Atherton. One of the nice features is that there is no limit on the dollar amount of cash-out. Many loan programs are limiting the amount of cash-out to refinancing homeowners.
Another nice feature is that this program can be used to finance second homes at a slightly lower loan-to-value percentage. It is one of the few competitive jumbo loan programs that I am aware of that allows cash-out on second homes.
If you own a home in Atherton or in other expensive areas of California, and like the idea of a 15 year fixed rate with interest-only payments to keep the payment low, contact me to see if this program is a good fit for you.
Do you need help structuring a loan, or getting a rate quote? Call me at (650) 222-0386, or e-mail me
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