1.25 Option ARM
1.25 Option ARM products are flexible. I am so confident in this product, I have converted my home and investment property to the 1.25 Option ARM.
An issue for many homeowners is managing monthly income and expenses, or "cash flow". Income varies and unplanned expenses come up. For many, our mortgage payment is our largest monthly expense, and the least flexible. The 1.25 Option ARM was designed to give you control over your mortgage payment. You can choose one of four payment options each monthbased on your specific cash flow needs.
1.25 Option Arm 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 also 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 1.25% option arm. If you have concerns over deferred interest, read about the small amount of appreciation required to offset it.
1.25 Option Arm 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 either a 30 year or 15 year payment schedule. I have included a 1.25 Option ARM statement.
The product 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 1.25 Option ARM payment rates, there is 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 manage your cash flow. You have the ability to increase the term of your loan from 30 to 40 years lowering your payment further. LTVs on 1.25% Option Arms 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 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
Savings over 3 years $52,872
I have developed an Adobe document detailing how this program works. Send me an email requesting a copy.
I have added a website dedicated solely to the 1.25 Option Arm.
Here is a useful 1.25 Option Arm payment calculator
Read very important information about 1.25 Option Arm Prepayment Penalties
Read more about 1.25 Option Arm Closing Costs
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 no obligation service.
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1.25 Option ARM