Creating and maintaining wealth is a very difficult task. Ask

any millionaire!!! The delicate balance of living a dream

lifestyle and holding expenses tight creates this difficulty.

As a financial advisor, I have assisted people accumulate

monies to live their dream life while discovering ways to

reduce their necessary expenses. Everyone would agree mortgages

are necessary expenses. Probably the biggest expense most of us

have. Mortgages present the opportunity to secure income tax

deductions while utilizing the house to live. What if you could

reduce your mortgage interest rate to 3% and be required to pay

interest only for 5 years? Would you refinance your current

house? Purchase another? While refinancing a client’s mortgage,

I discovered such a mortgage. The client will save lots of money

the next few years. Here is his scenario:

Client #1 $500,000 Loan Amount

Current

30 Year Fixed @ 6.00%=P&I $2,997.75/ month

5th year loan balance $456,989.77

Equity (assuming no appreciation) $43,010.23

Past

LIBOR ARM @ 3.00%=Interest only $1,250.00/ month

Applied additional $1747.75 / month to principal for 5 years

5th year loan balance $362,370.82

Equity (assuming no appreciation) $137,629.18

Creating and maintaining wealth is a very difficult task. Ask

any millionaire!!! The delicate balance of living a dream

lifestyle and holding expenses tight creates this difficulty.

As a financial advisor, I have assisted people accumulate

monies to live their dream life while discovering ways to

reduce their necessary expenses. Everyone would agree mortgages

are necessary expenses. Probably the biggest expense most of us

have. Mortgages present the opportunity to secure income tax

deductions while utilizing the house to live. What if you could

reduce your mortgage interest rate to 3% and be required to pay

interest only for 5 years? Would you refinance your current

house? Purchase another? While refinancing a client’s mortgage,

I discovered such a mortgage. The client will save lots of money

the next few years. Here is his scenario:

Client #1 $500,000 Loan Amount

Current

30 Year Fixed @ 6.00%=P&I $2,997.75/ month

5th year loan balance $456,989.77

Equity (assuming no appreciation) $43,010.23

Past

LIBOR ARM @ 3.00%=Interest only $1,250.00/ month

Applied additional $1747.75 / month to principal for 5 years

5th year loan balance $362,370.82

Equity (assuming no appreciation) $137,629.18

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

the loan balance thereby increasing your equity. This mortgage

interest program is termed negative amortization. Rather than

paying off the interest over the time period, you are paying of

a small portion of the interest but not the required amount.

Interest rates can go as low as 1.25%. If you want savings

refinance your mortgage.