It’s a nice loan, with interest only, the payment is around $2400. Not including taxes and insurance.
When it recasts in 10 years… it basically turns into a 30 years fixed at 6.1% making the payment a touch under $2900.
At the income limit, the DTI front end is 33%. That doesn’t leave much for other debt however the income limit, being in California, it’ll greatly help on taxes moving his expense for the next ten years to about $2000/month after taxes.
As long as he’s close to that for comparable rent, he’s good. He’s not having to move every couple years. His rent doesn’t go up an annoying $75/month every year. In ten years, the market will be different.
