Pay the interest first

This guide explains the benefits of a new GMAC mortgage that features interest-only payments for the first fifteen years.

This specially designed GMAC mortgage carries a fixed rate and a thirty-year term. Whereas most fixed-rate mortgages carry the same monthly payment across the life of the loan (e.g., your payment would be $1200 each month for thirty years), this GMAC mortgage adjusts the payment at the halfway mark. In effect, you spend the first fifteen years paying only the interest, and the final fifteen years paying the interest and the principal.

Paying the interest first can benefit families in many different situations. It is a great plan for anyone who plans to move within the first fifteen years. More generally, this GMAC mortgage is extremely helpful to any family who is looking to have the lowest possible monthly payment. For example, this mortgage is the perfect option for a young couple just starting out. When they first buy the house, their careers are just starting. By the time the payments increase, their earning power has also increased, making a higher payment no problem.

Best of all, there is no penalty for prepayment. If you want to start paying down the principal within the first fifteen years, you will not be penalized to do so.

This special GMAC mortgage carries a higher interest rate than traditional fixed-rate mortgages. That said, you will save money in many other ways. Since the interest is tax deductible, you can write-off your monthly payments for the first fifteen years. Additionally, the monthly payments are incredibly low.