Pick-A-Payment or Cash Flow ARM

There is a series of ARM products which have recently been developed.

An issue for many homeowners is in managing your monthly income and expenses, generally referred to as "cash flow". Income can vary on a monthly basis for many reasons and unplanned expenses of many kinds can come up when we least expect it. For many of us, our mortgage payment  is our largest monthly expense, but it is also the least flexible. The Cash Flow ARM was designed to give you greater control over your mortgage payment. You have the option of choosing one of four payment options each month based on your specific cash flow needs at the time.

Minimum Payment    A payment that is set for 12 or 60 months at a greatly reduced rate. The minimum payment rate for the 12 month option is currently at 1.25% (yes, 1.25%!) and the 60 month option is at 1.95%. These rates are for owner occupied primary residences. For Non-Owner it is 1.95 and 2.65%. This option not only maximizes cash flow but may also defer payment of interest on your mortgage allowing greater flexibility in managing your tax deductions. Plus, this minimum payment can not increase by more than 7.5% each year except when your loan is recast every five years or when your balance exceeds 110% of your initial loan amount.

Interest Only Payment    Defer paying principal on your loan and improve your monthly cash flow. The money you save improves your cash flow. This option is not available if the interest only payment would be less than the minimum payment.

Fully Amortizing Payment Options    You have the ability to make a principal and interest payment based on either a 30 year or 15 year payment schedule.

The Cash Flow Arm series allows you to choose your index based on your own needs. You can chose from the 1 month LIBOR (London Interbank Offered Rate), the COSI (Cost of Savings Index), CODI (Cost of Deposits index or the COFI (Cost of Funds Index). Another popular cash flow Arm is the 12-Mat program. It uses the Monthly Treasury Average (12-Mat). Sample Click Here.

Here is a web site that will show you and allow you to compare all of the indexes.
http://mortgage-x.com/general/mortgage_indexes.asp

The Minimum Payment Advantage    The example below is based on a $400,000 mortgage. It compares a traditional 30 year fixed rate payment based on the above 10 year average to the minimum payment available on the Cash Flow ARM again based on the 10 year average. Assumes that the Minimum Payment increases by the maximum 7.5% per year.