1% Mortgage Loans… What's The Catch? I

While there are several different types of 1% mortgage loans, there are really only two major keys to winning with a 1% mortgage loan.The first key is to make sure the loan is set up correctly from the beginning. And the second is to make sure you are using the loan correctly to gain the most benefit. First, let’s talk about how the loan works.  Then we’ll get into how to set the loan up correctly so you can reap the financial rewards these mortgage loans have to offer. To start with, 1% mortgage loans have payment options.  Each month when you get your mortgage statement you will have the option to make a 30 year fixed payment, a 15 year fixed payment, an interest only payment and a minimum payment at 1%. Although you are given several payment options, you should only select the 1% minimum payment.
Why?Because if you wanted to make a 30 year fixed, 15 year fixed, or interest only payment, you would be better off getting that type of loan.  Typically, these payments are higher with a payment option mortgage loan.
If you select the 1% minimum payment your first benefit will be a significant monthly payment reduction.  Your mortgage payment will likely be cut in half.  Of course, this is a pretty attractive first benefit for most home owners.