Cash Flow Option Loan
Cash Flow Option Loan products are now available from several lenders. I have recently converted both my home and investment property mortgages to the Cash Flow Option Loan. I am a mortgage broker specialized in the Cash Flow Option Loan with 37 lenders offering the Cash Flow Option Loan to ensure you get the best mortgage for your specific situation
An issue for many homeowners is in managing income and expenses, or "cash flow". Income varies and unplanned expenses can come up. Our mortgage payment is our largest expense, and the least flexible. The Cash Flow Option Loan was designed to give you control over your mortgage payment. Choose one of four payment options each month based on your cash flow needs.
Cash Flow Option Loan 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 1.00% and the 60 month option is 1.90%. This option maximizes cash flow and may defer payment of interest allowing flexibility in managing tax deductions. This minimum payment can not increase by more than 7.5% each year. Read about the important tax considerations of a cash flow 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 cash flow. This option is not available if the interest only payment is 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 a Cash Flow Option Loan statement as well.
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 taking advantage of the low payment rates, there is also a 5 year fixed payment option. With the Cash Flow ARM 5 year Fixed Payment , you have a fixed minimum payment for five years. You still have the four payment options to select from monthly to manage cash flow. You also may 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 based on the 10 year average. Assumes that the Minimum Payment increases by the maximum 7.5% per year.
30 Fixed Minimum Payment Monthly Savings Annual Savings
Savings over 3 years $52,872
I have developed an Adobe document detailing how this program works. Send me an email requesting a copy of "Understanding the Cash Flow Option Loan".
I have added a website dedicated solely to the Cash Flow Option Loan.