Model the Payment After an Interest-Only Period Ends

By Don McClain | Founder & Principal, Medro Advisors

America’s Loan Source applies the August 30 archive discussion of amortization to non-owner-occupied one-to-four-unit rentals. If a proposed loan has an interest-only period, request the schedule showing when principal payments begin, the remaining repayment period and the assumptions behind the new payment. Put that payment beside supportable rental income and operating costs. Test the change without assuming rent increases or a refinance. Commercial examples in the source do not establish residential loan terms. Discuss the property-specific schedule with America’s Loan Source and the provider before relying on the initial payment. FUNDED is forthcoming.

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