Fannie Mae Cuts Monthly Loan Payments to Encourage Buying
WASHINGTON — Mortgage finance giant Fannie Mae is offering a mortgage that lets home buyers make lower monthly payments at first in exchange for higher payments later and a slightly higher interest rate on the loan.
The product, InterestFirst Mortgage, will be available through Fannie Mae’s mortgage-lending business partners, the financial institution said.
A borrower will be able to get a 30-year fixed-rate mortgage and make payments on interest only for the first 15 years of a loan. After 15 years, the mortgage payment is recalculated to include both interest and capital. The borrower’s monthly payments would then become higher.
“The InterestFirst mortgage is ideal for borrowers seeking lower monthly payments and the interest rate stability of a 30-year, fixed-rate loan,” said Lynda Horvath, Fannie Mae senior vice president of new products for single-family mortgages.
It is aimed at people who want to be able to write a smaller mortgage check each month, Fannie Mae said. The mortgage will be attractive to home buyers in high-cost housing areas or those who expect to move within a few years, according to Fannie Mae.
The mortgages carry a slightly higher interest rate and are available for up to 95% of appraised value.
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