Apply Online          

Welcome
to TMC Lending!
 Your source for consumer information  

 

FHA Loan

Construction/Perm

Interest Only Mortgage


Commercial Loans

   
Real Estate Investor


Refinance


Loan Modification

12 Month MTA Option Arms

12 month MTA Option Arms are recently developed by several lenders. I am so confident in this product, I have recently converted both my home and investment property to 12 Month MTA Option ARMs. 

An issue for many homeowners is in managing your monthly income and expenses, or "cash flow". Income varies monthly for many reasons and unplanned expenses come up when least expected. For many, our mortgage payment  is our largest monthly expense, and the least flexible. The product is designed o give you control over your mortgage payment. You may choose one of four payment options each month based on your cash flow needs.

Minimum Payment    A payment is set for 12 or 60 months at a reduced rate. The minimum payment rate for the 12 month option is currently 1.00%  and the 60 month option is 1.90%. This option maximizes cash flow and may defer payment of interest allowing greater flexibility in managing your tax deductions. This minimum payment can not increase by more than 7.5% each year. Read about the important tax considerations of a 12 month MTA option arm. If you have concerns over deferred interest, read about the small amount of appreciation required to offset it.

        Interest Only Payment    Defer paying principal and improve your cash flow. This option is not available if the interest only payment would be less than the minimum payment.

        Fully Amortizing Payment Options    You may make a principal and interest payment based on a 30 year or 15 year payment schedule. I have included an 12 Month MTA Mortgage Option Arm statement.

The Cash Flow Arm series allows you to choose your index from the 1 month LIBOR or the MTA.

Here is a 10 year average comparison between a 30 year fixed and fully indexed LIBOR, MTA, COFI, and the 1 year Treasury Index in chart form.

Additional Options    If you want the additional security of a fixed payment while still taking advantage of the low payment rate, there is also a 5 year fixed payment option. With the 5 year Fixed Payment you have a fixed minimum payment for five years. You have the four payment options to select from monthly to manage your cash flow. You also have the ability to increase the term of your loan from 30 to 40 years lowering your payment even further. LTVs are available up to 100%!

The Minimum Payment Advantage    The example below is based on a $400,000 mortgage. It compares a traditional 30 year fixed rate payment based on the above 10 year average to the minimum payment available based on the 10 year average. Assumes that the Minimum Payment increases by the maximum 7.5% per year.

                    30 Fixed                    Cash Flow Minimum                 Monthly Savings                    Annual Savings

Year 1        $2,855                                $1,287                                        $1,586                                    $18,816
Year 2        $2,855                                $1,384                                        $1,471                                    $17,652
Year 3        $2,855                                $1,488                                        $1,367                                    $16,404

                                            Savings over 3 years        $52,872
                                            Savings invested at 8%    $56,885

I have developed an Adobe document detailing how this program works. Send me an email requesting a copy of "Understanding the 12 month MTA option arm".

I have added a website dedicated solely to  12 Month MTA Option Arms.

Here is a useful 12 Month MTA Option Arms payment calculator

Read very important information about 12 Month MTA Option Arms Prepayment Penalties

Read more about 12 Month MTA Option Arms Closing Costs

I have an article "Buying your home in 2008" by email explaining negotiating strategy in today's market.

As a Certified Mortgage Planning Specialist, I offer an analysis of your situation today can make suggestions on how small changes in how your consumer and mortgage debt is structured today can have a life changing effect in the years to come.  Read more about this free, no obligation service.