WHAT IS AN "OPTION ARM"?

• Has been called a more intelligent way to do a mortgage allowing borrowers to make principal reduction at 1.25%. It is a payment driven product that provides borrowers with greater cash flow flexibility from their monthly mortgage payment giving clients FOUR payment options every month. This is compared to most conventional mortgages that typically offer 1 or 2 payments options at the most every month. It is a unique, one of a kind loan product typically allowing a client to reduce their initial monthly payment by from 40% to 100%! Here is how it works…..

MAKE PRINCIPAL REDUCTION AT 1.25% !

• As an 'Option ARM', every month a client has the following 4 payment options on their mortgage: These are:

  1. Minimum Payment Due - 1.25% - Option 1 represents a principal and interest (P&I) payment on your mortgage balance at 1.25% amortized over 30 years. For a sample loan balance of $250,000, the payment would be $833.13 not including taxes and insurance and make $8 in principal reduction.

  2. Interest-only Payment - Option 2 represents an interest-only payment on your balance. The interest rate for Option 2 (and 3 and 4) is derived from a combination of a fixed margin and the current index for the mortgage - currently at approximately 3.96% - this combined rate represents your "Effective Interest Rate" - more about this in a second. Payment will $825.

  3. 30-Year amortized payment - Option 3 represents a 30-yr amortized payment on your balance at the Effective Interest Rate. This payment typically ensures considerable principal reduction at the effective interest rate. A sample payment on $250,000 at 3.96% would be $1,187 and make $362 in principal reduction.

  4. 15-Year amortized payment - Option 4 represent a 15-yr amortized payment on your balance at the Effective Interest Rate. This payment ensures the maximum principal reduction on your mortgage balance at the effective interest rate. A sample payment on $250,000 at 3.96% would be $1,844 and make $1,019 in principal reduction.