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Maryland Option ARMOption ARM products, available in Maryland, are available from several lenders. I am so confident in this product, I have converted my home and investment property to an Option ARM. An issue for many homeowners is managing 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. The Maryland Option ARM was designed to give you control over your mortgage payment. You can choose one of four payment options each month based on your specific cash flow needs. Minimum Payment A payment that 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 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 an 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 is less than the minimum payment. Fully Amortizing Payment Options You have the ability to make a principal and interest payment based on either a 30 year or 15 year payment schedule. I have included a Maryland Option ARM statement as well. The Option 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 a 5 year fixed payment option. With the 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 your cash flow. You also have the ability to increase the term of your option arm from 30 to 40 years lowering your payment further. 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 on the Option ARM 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 Year 1
$2,855
$1,287
$1,586
$18,816
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 Option Arm". I have added a website dedicated solely to the Option Arm. Here is a useful Option Arm payment calculator Read very important information about Maryland Option Arm Prepayment Penalties New! View my Wealthbuilder presentation and learn the safe way to manage your home equity and fund your retirement using a Maryland option arm I hope this information was useful to you. Please scroll down to view my Mortgage Market Guide. A weekly publication explaining the financial markets from a consumer's perspective that is available by email. I have nearly 8,000 subscribers and would be happy to have you as well. Your email address will never be used for any other purpose.
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