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Pay Option ARMPay Option ARM products are available from several lenders. I have converted my home and investment property to the Pay Option ARM. An issue for many is managing 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. The pay option arm was designed to give you greater control over your mortgage payment. Choose one of four pay options monthly based on your specific cash flow needs.        Minimum Payment   A payment that is set for 12 or 60 months at a greatly reduced rate. The minimum payment rate for the 12 month option is 1.00% and the 60 month is 1.90%. This maximizes cash flow and may also defer payment of interest allowing greater flexibility in managing your tax deductions. This minimum payment can not increase by more than 7.5% each year. Read about the important tax considerations of the pay option arm. 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   You may make a principal and interest payment based on a 30 year or 15 year payment schedule. I have included a Pay Option ARM statement as well. The product 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 additional security of a fixed payment while still taking advantage of the low payment rates, there is a 5 year fixed payment version. With the 5 year Fixed Payment, you have a fixed minimum payment for five years. You still have the four payment options to select from monthly to manage your cash flow. You also have the ability to increase the term of your loan from 30 to 40 years lowering your payment even further. LTVs are available 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 based on the 10 year average. Assumes that the Minimum Payment increases by the maximum 7.5% per year.                    30 Fixed                   Minimum Payment                         Monthly Savings                   Annual Savings Year 1      Â
$2,855Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â
$1,287Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â
$1,586Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â
$18,816 Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â
Savings over 3 years       $52,872 Please feel free to email me with any questions about the Pay Option Arm Learn more about Pay Option Arm Closing Costs I have developed an Adobe document detailing how this program works. Send me an email requesting a copy of "Understanding the Pay Option Arm". I have added a website dedicated solely to the Pay Option Arm. Here is a useful Pay Option Arm payment calculator Read very important information about Pay Option ARM Prepayment Penalties Learn more about investing In 2008, Short Sales are where most of the bargains in real estate are and they are NOT just for investors. Learn more about Short Sales 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.
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