Metas
10 Fixed Option ARM
The 10 Year FIXED Option ARM solves the problem of the option ARM in the borrower’s favor.
First and most importantly, the actual rate at which the loan accrues interest is FIXED for the first 10 years. The borrower will not get run over by a rising rate market.
Second, the loan allows for the 4 “options” just like the other ARM loans. Under the fourth option, the less-than-interest only payment will stay the same for 7 years. In the 8th, 9th, and 10th years it goes up on a pre-determined scale. This is much better than the standard product where the payment goes up every year for the first 5 and then the payment is recast based on the outstanding balance and the new prevailing rate.
Finally, the loan allows for a rate and program change if the market becomes favorable for the borrower. For a small fee, the borrower can choose to peg the rate at the current market price on any of the loan programs available, namely 3/1, 5/1, 7/1, and 10/1 ARMS.
These superior features greatly benefit the borrower.
· Have a fixed actual rate for an extended time.
· Have a fixed payment for an extended time.
· The margin is a low 1.875% over the LIBOR Index
· Pay the loan off at whatever pace is in their best interest.
· If rates fall, the borrower can change the rate for a small fee.
But it gets even better.
A. The rate on the 10 Year Fixed rate Option ARM is very competitive. The borrower does not pay higher than market rates for this flexible loan.
B. The guidelines are flexible. There is a stated income option for some borrowers. But for many, full information is reviewed and certain exceptions are made for debt to income ratios or loan amounts compared to the value of the property.This loan is designed for the borrower with excellent credit worthiness. Generally the borrower will have a high credit score, reasonable debt for their income and plenty of liquid assets as part of their portfolio.
C. Almost any type of residential improved property is eligible. This includes new Naples FL condos, co-ops, construction to perm loans, and standard condos and single family homes.
If you are thinking about buying property in Naples, be sure to use Glenn Ginsburg, your Naples buyer agent.
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Comments
3 Responses to “10 Fixed Option ARM”
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I hadn’t seen this option ARM yet, thanks for sharing. This seems like a better choice then most of the ones on the market.
This particular option ARM, does seem like a good choice for those that want a longer term fixed rate without feeling the fear of the normal adjustment rate mortgage where the rate can change. This is especially better than the “teaser rate” option ARM’s. I have seen only one lender with this product to-date.
Glenn,
Typically an option ARM is something that is done for individual investment in lieu of placing all that money into a home that does not appreciate at a “compounded,” rate of return. Should you take an option arm, you must do 2 very critical things: 1. invest in a side-fund. A fund that accumulates great, steady compounded interest over a fixed period of time. 2. Buy in an area that has historically appreciated (like Naples or Ft. Lauderdale) and ride the sea of appreciation.
Should you be missing one of these pillars, you will regret the day you ‘opted’ for the ‘option’ arm.
Slow and steady always wins the race.