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Option Loan Information

Option Loan products are flexible. An Option Loan is used on my home and investment property because of their flexibility. 

An Option Loan helps manage monthly income and expenses. Income varies and unplanned expenses come up. For many, our mortgage payment  is our largest monthly expense, and the least flexible. They 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 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 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 an option arm. 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 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 full payment based on either a 30 year or 15 year payment schedule. I have included an Option ARM statement as well.

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

Learn more about Option Loan Closing Costs

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

I have added a website dedicated solely to the Option Loan.

Read very important information about Option Loan Prepayment Penalties

Here is a useful Option Loan payment calculator

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 LoanPrequalify for your Option Loan
 

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