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MTA Mortgages
MTA mortgages are products developed by several lenders. Both my home and investment property mortgages are MTA mortgages.
An issue for many homeowners is managing income and expenses, or "cash flow". Income varies and unplanned expenses come up. For many, our mortgage payment is our largest expense, and the least flexible. MTA Mortgages 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 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 these mortgages. 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 have the ability to make a principal and interest payment based on a 30 year or 15 year payment schedule. I have included an MTA Mortgage statement as well.
The Cash Flow Arm series allows you to choose your index based on your own needs. You can chose 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 mortgages payment rate, 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 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 mortgage 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
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
Learn more about MTA mortgages closing costs.
I have developed an Adobe document that goes into detail on how this new program works. Send me a quick email requesting a copy of "Understanding MTA Mortgages".
I have added a website dedicated solely to the MTA Mortgages.
Read very important information about MTA Mortgages Prepayment Penalties
Here is a useful MTA Mortgages payment calculator
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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
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MTA Mortgages