A Perfect Home Mortgage Loan for Hands-On Borrowers
The Option ARM, also known as Pick a Payment!
- Has the seasonal nature of your income kept you from getting the mortgage you need to buy the home you want?
- Are you looking to refinance your home mortgage with a more flexible payment schedule?
- Or maybe you just need some extra cash from time to time.
The Option ARM (Adjustable Rate Mortgage) home loan offers several payment choices to consider each month so you’re able to pay more on the principal and interest when you can and pay less when you need to. You control your payments.
What is an Adjustable Rate Mortgage?
The traditional Fixed Rate Mortgage has fixed interest and principal payments for the life of the loan, for example 30 years. With this type of home mortgage loan, your first monthly payment will be the same amount as the last monthly payment you make, 30 years later. With an Adjustable Rate Mortgage (ARM), your interest rate is fixed only for the introductory period of the loan. Traditional ARMs offer different introductory periods, from 12 months to 10 years, during which the interest rate is fixed. This initial interest rate is generally lower than interest rates for Fixed Rate Mortgages. After the introductory period your interest rate will be based on one of the various indexes. Your interest rate after the introductory period is called the fully indexed rate. The fully indexed rate is the value of one of the indexes plus the margin. The margin (usually between two and 3.5) is determined by Mortgage Funding US based on whether you would rather pay higher closing costs or have a higher interest rate. Different ARMs adjust on different schedules. So, if you took out a 1 year ARM, the interest rate would be fixed for 1 year, after which it may be adjusted annually. A 3-year ARM will have a fixed interest rate for 3 years, after which it will be adjusted every 1 to 3 years. Readjustments to your interest rate are usually scheduled every 1, 3, 5, 7, or 10 years, depending on the terms of your home mortgage loan.
The Option ARM is a special type of Adjustable Rate Mortgage that features different payment alternatives with each monthly statement.
A Mortgage You Control
The Option ARM allows you to make a payment based on what’s important to you this month:
- Make the Minimum Payment to save up some money, make payments on other debts, or make investments.
- Keep on top of your interest expense, while still keeping some extra cash on hand, with the Interest Only Payment Option.
- Keep your loan on schedule with the traditional Full Principal and Interest Payment Option.
- Make larger payments to pay your home mortgage loan off ahead of schedule with the Full Principal and Interest Payment Option based on a 15-year term. (This option only available if the term of your loan is more than 15 years.)
- You can also see a drop in your monthly payments by making a large lump-sum principal payment at any time without any penalty!
The choices available to you through the Option ARM will give you the freedom and power to:
- Increase your cash flow
- Control interest expense
- Use your extra cash for other investments
Is the Option ARM ideal for you?
- If your income fluctuates from month to month you may not be able to keep up with payments on your Fixed Rate Mortgage or even your traditional Adjustable Rate Mortgage (ARM). This should not bar you from owning your own home! The Option ARM was created so that you can choose from several payment options depending on your financial situation in a given month.
- If you have just purchased your first home and it needs some improvements, you can make minimum payments to free up the cash you need for home improvements.
- If you expect your income to grow, you can make the minimum payments now and make larger payments later.
- If you have higher-interest debt, such as credit card bills, you can use the extra cash you keep each month to pay these debts down.
- If your home is in a high property appreciation area, the increase in the value of your home may outstrip any deferred interest you may accumulate.
If your situation is similar to any of these or you want to talk to a home mortgage loan professional to see if the Option ARM is right for you, call Mortgage Funding US today!
Click here for a detailed explanation of THE OPTIONS
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