1.000% Interest Rate Option ARMAn issue for many homeowners is in managing your monthly income and expenses, generally referred to as "cash flow". Income can vary on a monthly basis for many reasons and unplanned expenses of many kinds can come up when we least expect it. For many of us, our mortgage payment is our largest monthly expense, but it is also the least flexible. The Cash Flow Option ARM was designed to give you greater control over your mortgage payment. You have the option of choosing one of four payment options each month based on your specific cash flow needs at the time. 
Minimum Payment Option Interest-Only Option 40 Year Amortized Option 20 Year Amortized Option The Minimum Payment Advantage Proceed to Contact Form Option 1: Minimum PaymentThe minimum payment option is the option with which your payment is based upon a below market rate (currently as low as 1.000%). This option allows you to defer mortgage interest while maximizing your cash flow! So how does this option work?You enjoy the minimum payment option for the first 5 years and your payment is fixed for the first 12 months. It adjusts only once a year thereafter. With the payment adjustment cap of 7.5% you can rest assured that your payment will not increase by more than 7.5% of the minimum payment amount. This means that if your minimum payment for the first year is $100, it cannot be more than $107.50 in the second year. No surprises! What is negative amortization?If you elect to pay the minimum payment in any given month you elect to defer some of the interest on your loan. While deferred interest is added to your loan principle (also called negative amortization), deferring the interest makes financial sense if it helps you:
Which option makes best sense for you? The choice is yours! Note: Depending on your area, increases in principle resulting from making the minimum payment may be offset by the increases in equity gained as a result of market appreciation. Remember, your house is an investment that increases in value too! topOption 2: Interest Only PaymentDefer paying principal on your loan and improve your monthly cash flow. This option is not available if the interest-only payment amount is less than the minimum payment amount. topOption 3: Fully Amortizing Payment OptionsYou have the ability to make a principal and interest payment based on either a 40 year or 20 year payment schedule. topThe Minimum Payment AdvantageThe example below is based on a $200,000 mortgage. It compares a traditional 30 Year Fixed Loan with a 40 year Option ARM. (Note: We are assuming that the Minimum Payment amount increases by the maximum of 7.5% each year.)
Do you see the advantage? Please click on the link below. |
||||||||||||||||||||||||||||||||||||
