The Benefits…

Inexpensive way to borrow money. Money borrowed to finance your home is the cheapest money you can borrow! Interest rates on mortgage loans are typically much lower than on other loans AND the interest is tax deductible. A Payment Option Cash Flow mortgage allows borrowers to leverage their mortgage debt so they can pay more pressing expenses like high-interest credit cards debt, reorganize finances or invest money for retirement.

Flexible Payment Options. The four (4) payment options each month allows borrowers to remain flexible in case of unexpected financial needs (i.e. job loss, medical crisis, divorce, etc…). The low start rate payment and interest only payment options allow borrowers an opportunity to maximize their cash flow by allowing them to keep on hand more cash each month for other expenses, to invest, start a business, or to accelerate the pay off of more expensive, non-tax deductible debt. The Payment Option Cash Flow Mortgage gives borrowers control over how they pay their mortgage so they can do what makes sense for them.

Versatile Product Features.

Owner, non-owner, second homes
1-4 units
Purchase, rate and term and cash-out refinances
Full doc and stated income programs available

About Rates…

Start Rate. The start rate is on the loan for the first month only. It is the rate used to calculate the low start rate payment. The start rate payment (not interest rate) increases a maximum of 7.5% per year until the payment has reached the fully indexed rate. Note: even if the borrower elects the low start rate payment option interest accrues on the loan at the fully indexed rate (index + margin).

Fully Indexed Rate. This is calculated by adding the margin to the index. After month one (1), the fully indexed rate is the interest rate on the loan. The interest rate on The Payment Option Cash Flow Mortgage adjusts monthly. The adjustment is based on the change in the established index. The most popular index choices are the One-Month Libor, MTA, COSI and COFI.

Margin. Margin is the adjustment made to the index to calculate the interest rate (and assure lender profitability) on the loan. The margin stays fixed. The margin used is indicated on the note.

Index. An index is an independent, published economic indicator. There are a variety of commonly used interest rate indices. Lenders use indices to establish the interest rate for an adjustable rate mortgage (ARM). The Payment Option Cash Flow Mortgage is an adjustable rate mortgage. Indices adjust daily. The index used is indicated on the note.

Rates vary based on property type, loan to value ratio, borrower debt and credit, etc…

Important Things To Know About The Payment Option Cash Flow Mortgage

The impact of deferred interest. When the borrower chooses to defer the payment of interest due on the loan by making LESS than the interest-only payment, the amount deferred, or what is commonly referred to as "negative amortization", is added to the principal balance of the loan. Until this deferred interest is paid, the borrower will be charged interest on this additional amount borrowed. If and/or when the loan reaches 110% (it varies for each lender) of its original balance, the loan will be recast based on the balance, remaining term, and fully indexed rate. At this time, the low start rate payment will no longer be available as an option. The borrower will be required to at minimum cover the interest due on the loan by making the interest-only payment.

The interest rate can adjust monthly. The interest rate on The Payment Option Cash Flow Mortgage is determined by adding a margin to the indexed rate. This is referred to as the "fully indexed rate". As the indexed rate adjusts, so does the rate on the loan.

The Payment Option Cash Flow Mortgage is Ideal For…

Self/Employed / Commissioned Borrowers.
Fluctuating monthly income need not affect one's lifestyle

Move-up Home Buyers
Provides buyers with more home buying power with the low start rate and interest-only payment options

Borrowers with Consumer Debt
Earlier payoff of higher interest rate debt

The Four Payment Option Cash Flow Payment Options…

The Payment Option Cash Flow Mortgage gives the borrower financial control with four (4) payment options each month.

1. 30-Year Fully Amortizing Payment. This payment is based on the fully indexed rate and a 30-year payment schedule. The principle balance will change if this option is selected. This option was designed to let the borrower pay off their loan in 30 years.

2. 15-Year Fully Amortizing Payment. This payment is based on the fully indexed rate and a 15-year payment schedule. The principle balance will change if this option is selected. This option was designed to let the borrower pay off their loan in 15 years. For faster equity building, quicker payoff and interest savings this is the preferred loan program.

3. Interest Only Payment. This payment is based on the fully indexed rate. This payment will only appear if the low starter rate payment does not satisfy all interest due for the month. This option will cover only the interest due on the loan. The principle balance will not change if this option is selected. If this payment option appears, electing the low starter rate payment option will result in deferred interest on the loan.

4. Low Starter Rate Payment Option. This payment is based on the start rate and a 30-year amortization term. On most Payment Option Cash Flow Mortgages, this payment will increase a maximum 7.5% each year for the first 5 years. Please note that even if the borrower elects the low starter rate payment option, interest accrues on the loan at the fully indexed rate (index + margin). The principal balance may or may not change if this option is selected. In some cases, deferred interest (negative amortization) may occur in connection with this payment option. The low starter rate payment option will cease to be an option if or when the loan reaches 110% (it varies for each lender) of its original principle balance. For additional cash to invest, to payoff high interest credit cards, or use as needed, select this payment option.

Why Choose The Payment Option Cash Flow Mortgage

The Payment Option Cash Flow Mortgage is flexible and allows the borrower to decide whether they would like to match their loan payments to their variable or seasonal income or whether they would like to put more monies into a business, investment, or a large expense such as college tuition. The Payment Option Cash Flow Mortgage is a product designed to help borrowers achieve their financial goals.