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Option ARMs for Investment Property

Option ARMs for investment property are available from several lenders. I have converted both my home and investment property to Option ARMs. 

An issue for many investors is in managing income and expenses. Income varies when a tenant is lost and unplanned expenses come up. The mortgage payment  is our largest monthly expense, and the least flexible. Option ARMs for investment property were designed to give you control over your payment. Choose one of four option arms payment options each month 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 is 1.40% and the 60 month option is 2.3%. This maximizes cash flow and may defer payment of interest allowing flexibility in managing tax deductions. This minimum payment can not increase by more than 7.5% each year. Read about the important tax considerations of option arms. 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 cash flow. This option is not available if the interest only payment is less than the minimum payment.

        Fully Amortizing Payment Options    Make a principal and interest payment based on either a 30 year or 15 year payment schedule. I have included a Option ARM statement as well.

Option Arms for investment property allow 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 Option ARMs 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 have the four payment options to select from to manage your cash flow. And, you may increase the term of your option arms from 30 to 40 years lowering your payment further. Two other aspects of this product that are useful for investment property are the ability to close in the name of your LLC and they have no seasoning requirement so they are very useful to recapture equity if you bought well.

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                    Option Arms 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 Arms for Investment Property

Learn more about Option Arms for Investment Property Closing Costs

I have developed an Adobe document detailing on how this program works. Send me an email requesting a copy of "Understanding Option Arms for investment property".

I have added a website dedicated solely to Option Arms.

Here is a useful Option Arms payment calculator

Read very important information about Option Arms for Investment Property Prepayment Penalties

In 2008, Short Sales are where most of the action in real estate is. Learn more about Short Sales

Rehab programs for non owner occupied units

Learn about closing in an LLC

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 Arms for investment propertyPrequalify for your Option ARMs for Investment property

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