Flexible Option Mortgage Information
Flexible Option Mortgage products are unique. A Flexible Option Mortgage is used on my home and investment property because of their unique flexibility.
A Flexible Option Mortgage helps manage monthly income and expenses, or "cash flow". Income varies monthly and unplanned expenses come up when least expected. For many, our mortgage payment is our largest monthly expense, and the least flexible. They are designed to give greater control over your mortgage payment. You can choose one of four payment options monthly based on your specific 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 1.00%, and the 60 month option is 1.90%. This maximizes cash flow but may also defer payment of interest on your mortgage allowing flexibility in managing your tax deductions. This minimum payment can not increase by more than 7.5% each year. Read more about the important tax considerations of an option arm. 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 on your loan and improve your monthly cash flow. This option is not available if the interest only payment is less than the minimum payment.
Fully Amortizing Payment Options You have the ability to make a full payment based on either a 30 year or 15 year payment schedule. I have included a Flexible Option Mortgage statement as well.
The Flexible Option Mortgage 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 security of a fixed payment while taking advantage of the low payment rates, there is a 5 year fixed payment option. With the 5 year Fixed Payment option, you are guaranteed a fixed minimum payment for five years. You have the ability to increase the term of your option arm from 30 to 40 years lowering your payment further. Flexible Option Mortgage LTVs are available up to 100% !
The Minimum Payment Advantage The example is based on a $400,000 mortgage. It compares a 30 year fixed rate payment based on the 10 year average to the minimum payment available on the Flexible Option Mortgage again 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
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 Flexible Option Mortgage".
I have added a website dedicated solely to the Flexible Option Mortgage.
Here is a useful Flexible Option Mortgage payment calculator