I proposed this loan program to Client #2.

Client #2$1.2 Million Loan Amount Current 5/25 ARM@4.25%=P&I$5,903.28/ month 5th year loan balance$1,064,681.48 Equity (assuming no appreciation)$ 135,318.35 Proposed LIBOR ARM@3.00%=Interest Only$3,000/ month Applied additional $2903.20 / month to principal for 5 years 5th year loan balance$ 971,261.81 Equity (assuming no appreciation)$ 228,738.19

You can see from these scenarios this mortgage can be a great tool to reduce your monthly mortgage payment or to shave down loan balance thereby increasing your equity.

This mortgage interest program is termed negative amortization. Rather than paying off interest over time period, you are paying of a small portion of interest but not required amount. Interest rates can go as low as 1.25%

If you want savings refinance your mortgage.

3. Does renting cost more than owning? Sometimes you can find a house that is actually cheaper to own than place you are currently renting. If you are purchasing a house purely for sake of less cash outflow each month, be sure to consider all costs of ownership: mortgage, insurances, maintenance, snow removal, etc. If you still find that owning is more cost effective than renting, go for it.

4. Is it what you really, really want to do? Occasionally owning a house is what you really want to do, even if it doesn’t make economic sense. In that case, make sure you do your homework, consider three thinking points above, and make best choice you can. Buy most house for least money in best neighborhood.

Buying a house can be an emotionally charged time in your life. It is also an enormous user of your resources. Take your time and be confident that you are ready to move into another stage of your life where you can be proud to say “This is my house.”