Mortgage Online at 425.com Preference ARM Loan Programs
• I Month COFI Preference
What is Preference?
• Preference Programs are Designed to Offer the Borrower the Greatest Control Over his Mortgage Finances
• Preference Offers 4 Payment Options
How it Works...
• Each Month, a Borrower Receives a Statement which Contains All the Information which is Normally Found in a Payment Coupon Book, Plus it Outlines the Borrower's Four Payment Options
Full Principal and Interest Payment
• A Borrower may Elect to Make a Payment Sufficient to Pay the Interest Due as well as the Scheduled Principal Amount.
• The Loan Balance Decreases by the Amount of the Principal Paid
Accelerated Payment
The Borrower may Elect to Build Equity Faster
• Borrower Makes a Payment which Amortizes the Loan over a 15 Year Period
Interest Only Payment
• A Borrower may Elect to Pay Only the Current Interest in a Particular Month
• The Loan Balance Does Not Increase
Minimum Payment
Mortgage Online at 425.com Preference Arms Offer Payment Caps which Limit the Amount a Borrower's Monthly Payment may Increase. A Borrower may Choose to Pay an Amount which is Less than the Amount Necessary to Pay all of the Current Interest Due
The Amount which a Borrower's Payment is Insufficient to Pay the Current Interest is Added to the Outstanding Principal Balance of the Loan
Borrower has Flexibility to Manage Their Cash flow
Great for Borrowers with Irregular Income -
Great for Borrowers who experience intermittent cash flow problems -
Ideal for Borrowers with Investment Properties -
Arbitrage Opportunity for Borrowers
• Make Minimum Payments, Invest the Rest
1 Month MTA
• MTA (Monthly Treasury Average) is the Average of the Monthly Average of the 1 Year CMT (Constant Maturity Treasury) which is Published by the Fed.
Some Details of the Loan
• Teaser Period
- 1 month
• Payment Cap
7.5% maximum increase every 12 months
• Maximum Negative Amortization
- 110% of the Original Principal Balance after which the loan is re-cast to fully amortize over the remaining term)
• Automatic re-cast
- loan is automatically recast every 5 years to ensure full amortization
Why MTA vs. CMT, LIBOR, or COFI?
Features Start Rates as Low as 2..95, Margins as low as 2.20, and Life Caps as Low as 8.95
MTA is Stable like COFI (see graph next page), and is Derived from a Widely Known and Published Index (Treasury Bills)
The 10 year Average of MTA is 6.00 Compared to COFI at 5.868 (a spread of 13.2 basis points) -
MTA is Currently Offered with Approximately 55 basis points Less Margin at the Same Price
MTA has Decreased 20 basis points over the last year while COFI has Increased 10 basis points in the same period
1 I th District COFI
• Similar Structure to MTA (except the Index)
Why would a Borrower Use This Loan?
> "Super Jumbo Borrower"
- Loans to $2 million
• Flexible Payment Terms
- 4 Payment Options
• Low Start Rate, Margin, and Life Cap
• Easier to Qualify
- Common Sense Underwriting - Limited Document Program
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