Option ARM Payment Options

Library

Option ARM - 4 Payment Options

• Option 1: Minimum Payment
• Option 2: Interest Only Payment
• Option 3: 30-Year Amortized Payment
• Option 4: 15-Year Amortized Payment

Option ARM Program puts you in control of your cash flow. Each month, you will receive an easy to read loan statement that lets you choose the payment amount that best suits your current financial needs. Pay the minimum amount to free up funds for other uses, or make larger payments for faster equity build up.

Payment Options

Option 1

Minimum Payment: payment is set for 12 months at a reduced payment rate, thus maximizing cash flow and may defer the payment of interest on your mortgage loan.

• Payment adjusts annually for first first five-years and is determined each year by multiplying the previos year's monthly payment by 107.5%.
  
  
• After the intial 5-years or if the principal balance reaches 110% (125% with some lenders) of original loan amount, the minimum payment becomes an amortized payment over the remaining life of the loan.
  
  
• 7.5% Payment Cap limits the amount that this option payment can rise each year

Option 2

Interest Only Payment: allows you to take the extra money that you would normally put toward principle reduction of your loan and use it for reducing other debt such as high-rate credit cards or for investment. You pay only the accrued interest each month. This option is not available when interest only is less than the minimum payment.

Option 3

30-Year Amortized Payment: to keep your loan on schedule, you can opt to pay your loan in monthly installments based on a traditional 30-year schedule! This option is not offered if the principal and interest payment is less than the minimum payment due.

• Calculated monthly based on the previous month's fully indexed rate, current loan balance & remaining loan-term.
  
  
• Pays current interest due and reduces principal amortize loan over 30-years (or 40-years, if 40-year option taken at close of loan).

Option 4

15-Year Amortized Payment: allows for more rapid principal reduction with a principal and interest payment on a 15-year amortization schedule! When cash flow permits, this option permits you to make larger payments and pay down more of your loan during the first 15 years of your loan. This option is not offered if the principal and interest payment is less than the minimum payment due.

°   °   °   °   °

Example: $500,000 Owner Occupied 1-Year Option ARM

1. Payment Option - 1.00% amortized 30-years (40-year optional)
2. Payment Option - 6.50% interest only
3. Payment Option - 6.50% amortized over 30 years = qualifying rate
4. Payment Option - 6.50% amortized over 15 years

Back to Top