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Option ARM Mortgage

Option ARM Mortgage products are available from several lenders. I have converted my home and investment property to an Option Arm mortgage. 

An issue for many homeowners is managing income and expenses. Income varies and unplanned expenses come up. For many our mortgage payment  is our largest monthly expense, and also the least flexible. The Option ARM Mortgage was designed to give you control over your mortgage payment. Choose one of four option arm mortgage payment options monthly 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 arm mortgage 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 the 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 on your loan and improve your monthly cash flow. This 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 Option ARM statement as well.

The Option Arm 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 extremely low payment rates, there is a 5 year fixed payment option. With the 5 year Fixed Payment option, you have a fixed minimum payment for five years. You may increase the term of your option arm from 30 to 40 years lowering your payment further. 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 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
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

Please feel free to email me with any questions about the Option Arm Mortgage

Learn more about Option Arm Mortgage Closing Costs

I have developed an Adobe document detailing how this program works. Send me an email requesting a copy of "Understanding the Option Arm Mortgage".

I have added a website dedicated solely to the Option Arm Mortgage.

Here is a useful Option Arm Mortgage payment calculator

Read very important information about Option Arm Mortgage 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.

     Option Arm MortgagePrequalify for your Option ARM Mortgage

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