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Your $300k home purchase, with 35% down, has a $200k mortgage -- the 6% Interest-Only for 10-years is likely written with a 2.5% margin on the 1-year LIBOR -- no one knows what the index will be that far into the future.
However, your contract should display the amortization, specifically the Principal and Interest at 10-years out -- look at your Truth-in-Lending in your packet from the Title company at which you signed the contract...it's in there.
Approximate figures, however, would be: (assuming 30-yr amort. and no escrows, and an index at 3.500%)
$1000/month interest-only payments for 120 months
$1432/month principal & interest in months #121-132
My best suggestion is to add $400/month extra principal payment to your mortgage servicer; this will reduce your 360-month term by 3+years, saving you $50,000+ and your typical monthly payment in month #121 will be about $1300.
So, I have an interest only mortgage. Its locked in at 6% for 10 years then is adjustable once a year for the next 20 years. The question I have is, At the end of the 10 years interest only and fixed % what happens? I was told when I signed the loan that the interest will get adjusted and my new monthly minimum will also include a portion of the principal amount. I asked over and over again if my payments will increase and was told they would only increase if the % at the time was higher than 6%.
Recently after speaking to a friends son (who just graduated college and is working for a mortgage brokerage firm for the last 2 months) says that what they have told me is true in regards to the interest but that the amount to be used to reduce the principal balance will be added on top of the current minimum thereby increasing my monthly minimum by possibly $1000. Could someone with an IO or someone from the mortgage industry please shed some light?
I think you need to look at your mortgage document to get the answers. If this is indeed the case, however, you need to refinance quickly.
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