Interest Only Jumbo LoanCredit Cards and LoansInterest only jumbo loan...the current Fannie Mae limit for a single family residence in most states is $359,650. Anything over that amount is called a "Jumbo" loan. You probably already knew that though or you wouldn't be searching for one. You probably also know that an interest only loan is one where you don't pay off any of the premium on the loan for a set number of years. The most common length of time for an interest only loan to stay that way before principal payments start is 5 years. Not coincidentally, this is also a common length of time for an adjustable rate mortgage (which most interest only loans are) to end it's temporary fixed status and start adjusting. If you are a homeowner with an interest only jumbo loan, the point at which it becomes both principal and interest and also starts adjusting is usually the point at which you will need to either re-finance or move. In a rising interest rate environment, these two simultaneous increases in your monthly interest rate could easily double your monthly payments. Ouch! Add to that the uncertainty that the recent rapid increase in home values could turn and go the other direction during your 5 years of relative bliss, and you've got a recipe for disaster. Instead of an interest only jumbo loan, we would like to suggest that you look for a house that is more within your means.
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