WASHINGTON Fannie Mae has launched a 30-year fixed-rate mortgage product that requires borrowers to make only interest payments for the first 15 years of the loan.
After 15 years the payments are automatically raised to include principal and interest for the remainder of the term, the company said. The product, called InterestFirst, was unveiled Monday and is available through Fannies lender partners.
Fannie said the product will lower monthly payments of conventional 30-year fixed-rate mortgages. For example, at current rates the average borrower would pay about $1,347 a month for a regular 30-year mortgage of $200,000 but only $1,229 for the first 15 years of an InterestFirst mortgage.
The InterestFirst mortgage is ideal for borrowers seeking lower monthly payments and the interest rate stability of a 30-year fixed-rate loan, Lynda Horvath, senior vice president of new products for Fannies single-family mortgage business, said in a press statement.
Fannie said the product will be attractive to homebuyers in high-cost housing areas, or those who expect to move for job or family reasons within a few years, Fannie said.