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MTA Adjustable Loan
MTA Adjustable Loan products have been developed by several lenders. I have converted my home and investment property to an MTA Adjustable Loan.
An issue for many is managing monthly income and expenses, or "cash flow". Income varies and unplanned expenses come up. Our mortgage payment is our largest monthly expense, and the least flexible. The MTA adjustable loan product was designed to give you control over your mortgage payment. You can choose one of four payment options monthly based on your 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 option maximizes cash flow and may also defer payment of interest on your mortgage allowing greater flexibility in managing your tax deductions. Plus, this minimum payment can not increase by more than 7.5% each year. Read more about the important tax considerations of an MTA Adjustable Loan. 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 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 Adjustable Loan statement as well.
The MTA Loan allows you to choose your index from the 1 month LIBOR (London Interbank Offered Rate) or the MTA (12 Month Treasury Average).
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 are looking for the additional security of a fixed payment while still taking advantage of the extremely low MTA loan payment rates, there is a 5 year fixed payment option. With the 5 year Fixed Payment, you are guaranteed a fixed minimum payment for five years. You still have the four payment options to select from to manage cash flow. And, you also may increase the term of your loan from 30 to 40 years lowering your payment even further. LTVs are 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 available on the MTA loan based on the 10 year average. Assumes 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
Year 2
$2,855
$1,384
$1,471
$17,652
Year 3
$2,855
$1,488
$1,367 $16,404
Savings over 3 years $52,872
Savings invested at 8% $56,885
I have developed an Adobe document detailing how this program works. Send me an email requesting a copy of "Understanding the MTA adjustable loan".
Learn more about MTA adjustable loan closing costs.
I have added a website dedicated solely to the MTA Adjustable Loan.
Here is a useful MTA Adjustable Loan payment calculator
Read very important information about MTA Adjustable Loan Prepayment Penalties
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 free, no obligation service.
Prequalify for your
MTA Adjustable Loan