Interest Months is to indicate how many months the borrower will only be paying interest. Thus the title Interest-First.

Example:  Fixed Rate Interest First Product

When you set up a five year Interest-First fixed-rate product, you enter 60 in Interest Months. On the 61st month, a full P&I payment will be computed automatically on the loan balance over the remaining term.

Example:  ARM Interest-First Product

When you set up a five year Interest First ARM Rate Product (where the interest does not change until after the Interest Only period), you indicate it is an Interest-First loan in the Margin - Payment Table (01.15.14.17). Interest-First Loan: <Y-N>. Enter a Y then the number of months to P&I ADJ: 60.

Example:  When the interest will adjust during the Interest Only period.

Enter a Y for Interest-First loan and the number of months to the P&I adjustment as indicated above.

During the Interest-First period, you set up the ARM adjustment as you would any other regular ARM loan.

In this example, let's say the interest will adjust every 12 months during the Interest Only period. Enter ADJ MO: 12 then enter MO BETWEEN: 12. The ARM Notice when printed will indicate a change in the interest rate and the amount of the next Interest Only payment.

NOTE: There is an example of how this is set up in the new Mortgage Computer Handbook (pages 13 & 14). If you don't have a copy, it is suggested you might want to purchase a copy!