Explanation of MTA Loans

MTA loans are flexible. I am so confident in this product, I have converted my home and investment property to MTA Loans.

An issue for many homeowners is managing income and expenses. Income varies for many reasons and unplanned expenses come up. For many, our mortgage payment is our largest monthly expense, and the least flexible. MTA Loans are designed to 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 also defer payment of interest allowing 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 MTA Loans. If you have concerns over deferred interest, read more 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 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 an MTA Loans statement as well.

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

Fixed         7.710%
T Bill          7.708% average of 4.833 with a 2.875% margin
COFI         7.490% average of 4.590 with a 2.9% margin
MTA          7.442% average of 4.942 with a 2.5% margin
LIBOR       7.102% average of 4.852 with a 2.25% margin

Additional Options If you want the additional security of a fixed payment while still taking advantage of the low payment rate, there is a 5 year fixed payment option. With the MTA Loans 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 now 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                                $1,633                                        $1,222                                    $14,660
Year 2        $2,855                                $1,755                                        $1,099                                    $13,190
Year 3        $2,855                                $1,887                                        $986                                       $11,610

Savings over 3 years $39,450
Savings invested at 8% $44,704

I have developed an Adobe document detailing how this program works. Send me an email requesting a copy of "Understanding MTA loans".