Our Option Arms Allow You To Control How You Pay Your Mortgage !

CODI, COSI, COFI, MTA and LIBOR ARMS

The Features and Benefits, The Real Upside and Downside....THE TRUTH!

A 1 month adjustable rate mortgage is based on an ever-below market index - either the COFI, MTA, CODI, LIBOR or COSI - and has the following loan features:

• A fixed interest rate for an initial 1 month period; thereafter the interest rate (fully indexed rate) may change monthly.
• A minimum payment amount, which is based on the start rate, adjusts on an annual basis subject to a 7.5% payment change cap
• A 7.5% payment change cap limits how much the minimum monthly payment can increase or decrease from the previous minimum payment, except on the fifth year of your loan and every five years thereafter. Payment change caps are not effective when the principal balance exceeds 110% (this percentage cap varies depending on program) of the original loan amount and payments may adjust more frequently than annually in such situations to enable your loan to be repaid in 30 years. Payment adjustments are calculated based on the remaining loan term and current interest rate.
• A lifetime interest rate cap that protects you by limiting how high your interest rate can go.
• Interest rate is calculated by adding together the loan margin (this is fixed throughout the life of the loan) and the current month's index rate.
• Your fully indexed rate payments (interest only, principal and interest, 15 year option -- if offered), is based on the outstanding principal balance (this characteristic may not apply to every lender and every program -- please check with your loan officer).

• Each month, you receive a loan statement lets you choose the payment amount that best suits your financial situation: Pay the Minimum amount or Interest Only to free up funds for other uses such as paying off high interest credit cards, contributing to college or retirement funds, etc. Or you can make larger payments for faster equity build-up. It's ideal if your income fluctuates or steadily increases over the years.

Up to Four Payments Options each month

Option 1 - Minimum Payment Due - This option gives you more cash now and keeps your monthly payments manageable. The minimum payment allows for the lowest mortgage payment of any kind of loan.

• You can pay the minimum amount, in which case some of your interest might be deferred. Deferred interest,occurs when the monthly payment is not sufficient to cover the Interest accrued during the month prior. The unpaid Interest is added to the balance of the loan, rather than increasing the current monthly payment.
• Minimum Payment changes annually and is calculated using the initial start rate for the first 12 months.
• The minimum monthly payment is usually recalculated annually thereafter; and is based on the outstanding balance, remaining loan term and prevailing interest rate. This change is subject to a 7.5% payment cap for the first 5 years.
• 7.5% Payment Change Cap limits how much this option payment can increase or decrease each year
• During the initial interest rate period (1 month), Option 1 represents a full principal and interest payment; therefore Options 2 and 3 are not applicable

Option 2 - Interest Only Payment - At those times when the minimum monthly payment is not sufficient to pay the monthly interest due, you can avoid deferred interest by paying the minimum monthly payment plus any additional interest accrued during the month.

• Payments remain manageable, with no change in your principal balance for that month
• Option 2 will not be offered if the interest only payment is less than the minimum payment due, since the minimum payment is the least amount the lender will allow to be paid.

Option 3 - 30 Year Full Principal and Interest Payment - This is the fully amortized payment based on a 30 year loan. (Some programs offer a 40 year term)

• Calculated each month based on the prior month's interest rate, loan balance and remaining loan term
• Pays all the interest due and reduces your principal, to pay off your loan on schedule
• Option 3 will not be offered if the full principal and interest payment is less than the minimum payment due, since the minimum payment is the least amount the lender will allow to be paid.

Option 4 - 15-Year Full Principal and Interest Payment (if applicable - depends on lender)- For faster equity build-up, quicker payoff and substantial interest savings, choose the largest monthly payment option.

• Calculated to amortize your loan based on a 15-year term from the first payment due date
• Option 4 will be offered only on the 30- or 40-year term and will cease to be an option when the loan has been paid down to its 16th year.

~Lifetime interest rate cap (life cap) which protects you financially by limiting how high your interest rate can go. The rate cap varies from lender to lender and program to program. - See individual programs.

• Fixed margin for the life of the loan. (This is how the lender makes their money.)
• Manage Cash Flow
  • Having up to four payment options allows you to manage your cash flow and overall financial picture on a monthly basis.
  • If rates increase, you can pay the minimum amount (Option 1), in which case some of your interest would be deferred. Deferred interest, also known as negative amortization, occurs when the monthly payment is not sufficient to cover the interest accrued during the prior month. The unpaid interest is added to the balance of the loan, rather than increasing the current monthly payment.
  • You can avoid deferred interest and take advantage of the maximum tax benefit in the current year by paying Option 2 or 3.
  • Rate decreases may result in accelerated amortization, reducing principal or any unpaid interest more rapidly.
• Tax Planning. The borrower can defer interest payments and at the end of the year, analyze their tax situation. If it serves their tax interests, they can make a lump sum payment toward any interest that has been deferred and deduct it for tax purposes. Please check with your account on how best to handle your tax situation.
• Easy qualifying. Many COFI/MTA/CODI/COSI/LIBOR lenders allow homebuyers with good credit to apply without documenting their income, assets, or source of down payment. We even have one lender that will not ask for employment information, which is perfect for self-employed people who have not been in business for 2 years (Up to 80% LTV only)!
• Increase Flexibility - After considering your monthly financial objectives, choose the available option that best suits your needs. Just enter the amount of the option selection in the payment coupon section of the loan statement. In addition to the four payment options, your monthly statement will show, if applicable, the total amount of unpaid deferred interest on your loan. You may pay all or part of this deferred interest at any time. No options will be offered if the loan is delinquent; then the total amount due will be required.