Chesapeake, Virginia, January 21, 2009 -- Money
magazine recently reported on "21 good things to do in a bad market."
Their sixth piece of advice was to "convert your old IRA to a Roth."
• Do you hesitate opening your monthly
retirement account statement?
• Is your IRA and company-controlled 401(k) moving in the wrong direction? Our seminar on IRA to Roth Conversions can teach you how. Learn
more here.
View our informative and helpful
financial videos. View all videos.
Fixed Rate Mortgage vs. Interest Only Mortgage
A fixed rate
mortgage has the same payment for the entire term
of the loan. Use this calculator to compare a
fixed rate mortgage to Interest Only Mortgage.
Definitions
Fixed
Rate Mortgage
A
fixed rate mortgage has
the same interest rate and
monthly payment throughout
the term of the mortgage.
The payment is calculated
to payoff the mortgage balance
at the end of the term.
The most common terms are
15 years and 30 years.
Interest Only Mortgage
An
Interest Only mortgage only
requires monthly interest
payments. Since you are
not paying any principal,
this can lower your monthly
payment. However, since
your mortgage's principal
balance is not decreased,
you will have a balloon
payment at the end of the
mortgage's term. Some Interest
Only mortgages will also
be adjustable rate mortgages
(ARM). An Interest Only
ARM will often have a period
where the interest rate
is fixed, and then it is
adjusted annually. This
calculator assumes that
the interest rate for your
Interest Only Mortgage remains
fixed for the entire term.
Mortgage
amount
Expected
balance for your mortgage.
Term
in years
The
number of years over which
you will repay this mortgage.
The most common mortgage
terms are 15 years and 30
years. Please note that
for the Interest Only Mortgage
you will have a balloon
payment for the entire principal
balance at the end of the
loan term.
Interest
rate
Annual
interest rate for each mortgage
type.
Prepayment
A
monthly prepayment of principal
you would like to apply
to your Interest Only Mortgage
balance.
Monthly
payment
Monthly
principal and interest payment
(PI) for the Fixed Rate
Mortgage. This is an interest
only payment for an Interest
Only ARM.
Information and interactive
calculators are made available to you as self-help
tools for your independent use and are not intended
to provide investment advice. We cannot and do not
guarantee their applicability or accuracy in regards
to your individual circumstances. All examples are
hypothetical and are for illustrative purposes.
We encourage you to seek personalized advice from
qualified professionals regarding all personal finance
issues.
