| This loan program is an adjustable rate mortgage with a low initial monthly payment that will increase each year for the first five years. It also offers other payment options to help you budget your monthly cash flow. - Minimum Monthly Payment
- Interest Only Payment
- 30-year Amortized Payment
- 40-year Amortized Payment
- 15-year Amortized Payment
Its low introductory start-rate allows you to make very low initial mortgage payments and low qualifying rates enable you to qualify for more home. Calculating the monthly payment: The payment during the first five years starts by calculating the payment using the initial low introductory rate, usually 1 percent to 2 percent. That will be your payment rate. Each year the payment will increase 7.5 percent for the first five years. | Minimum Payment Changes: | | Year 1 | $1000.00 | = Base of Minimum Payment | | Year 2 | $1075.00 | = Year1 $1000.00 + 7.50% | | Year 3 | $1155.63 | = Year2 $1075.00 + 7.50% | | Year 4 | $1242.30 | = Year3 $1155.63 + 7.50% | | Year 5 | $1335.47 | = Year4 $1242.30 + 7.50% | In year six, the payment will then be calculated using the index rate plus the margin rate, and amortized over the remaining term of the loan. On a thirty-year loan, the remaining term is twenty-five years, and on a forty year loan the remaining term is thirty-five years. The note rate is the interest rate the bank will charge you each month. Some programs will use the introductory rate as the note rate for the first three months. After that introductory period, the note rate will then adjust to the index rate plus the margin rate. | EXAMPLE: | COFI index | 3.626 | | Margin | 2.250 | | Index + Margin | 5.876 | | Payment Calculation: | | Year 1 | use Introductory Rate | 1.000% | | Term | 30 years | | Initial Loan Amount |
| | Year 6 | Index + Margin | 5.876 | | Term | 25 years | | Loan Amount plus Deferred Interest | Deferred Interest: The minimum payment option can help keep your monthly payments affordable. If the minimum monthly payment is not sufficient to pay the monthly interest due, you will then have deferred interest. That is, the interest that was not paid will be added to the principal loan balance. Your loan balance increases each month. This is where the term negative amortized loan comes from. The balance increases, instead of decreases like in a normal loan. You can always avoid deferred interest by choosing the interest-only payment option. Payment Options: With the option ARM, you generally have at least two fully amortized payment choices, leading to a quicker loan payoff. If you prefer to pay off your loan on schedule, you can make the fully amortized payment based on a thirty- or forty-year loan, or you can choose the fifteen-year payment option for the fastest equity buildup. Option ARM loan programs are right for you if you'd like to own your property only for a short time, and prefer affordability and flexibility in your monthly payment. However, if you select the minimum payment option in the early years, you should be prepared for possible sudden increases in your monthly payments thereafter. Minimum Payment
With the minimum payment option, your monthly payment is set for twelve months at your initial interest rate. After that, the payment changes annually. Interest-Only Payment
With the interest-only payment option, you can avoid deferred interest, when the minimum payment is not enough to pay the monthly interest due. This payment option does not result in your principal reduction. The interest-only payment will change every month based on changes in the ARM index used to determine your fully indexed rate. Fully Amortized Fifteen-, Thirty- or Forty-year Payment
Fully amortized means you have equal monthly payments for the entire term of the loan, and have a zero balance at the end. With fully amortized payments, you pay both principal and interest. Your payment is calculated each month based on the prior month's fully indexed rate, loan balance and remaining loan term. Index plus Margin
The index is the base rate used to determine your interest rate. Most people are familiar with the Prime rate, T-bill or Cofi. Option ARM programs are is usually based on one of the following indexes: - Monthly Treasury Average (MTA)
- London InterBank Offered Rate (LIBOR)
- 11th District Cost Of Funds Index (COFI)
- Cost of Savings Index (COSI)
The Margin is the number of percentage points (for example, 2.75) the lender adds to the index rate to calculate the ARM interest rate, or note rate, at each adjustment. The margin is fixed at the time the loan is funded. The interest rate you will be charged is the index rate plus the margin. The Payment Option ARM goes by several different names: Option ARM, PayOption, Pick-a-Payment, Neg Am Variable, Negative Amortized loan.
Interest only loan programs provide the same features as fixed and variable rate programs, and they additionally offer a lower payment option. With an interest only loan payment option, you pay only the interest portion of the payment but no principal. | Interest Only Programs | - Several payment options
- Lower monthly payments
- Qualify for a higher loan amount
- Qualify at the interest only payment
- Option to pay the full principal and interest payment
- Interest only payments for up to ten years
| - Higher rates
- Principal loan balance will not decrease during the interest only payment period
- Payment will be higher for the remaining term
| An interest only loan can be more expensive compared to a fully amortized loan. Many lenders add a fee of one-quarter point for the interest only option. Interest only payment options allow you to qualify at the starting interest only payment. This gives you more buying power and a lower monthly payment compared to an amortized loan. You pay interest based on your principal balance. On an interest only loan, your principal balance does not decrease, therefore, you pay more interest with this option.
Low credit scores, late payments showing on your credit report, recently bankrupt, prior foreclosure, or behind on payments? Do you own your home and need cash to pay bills? Want to buy a home and need 100% financing? It can happen! Low credit scores, recent bankruptcy, foreclosure or late payments don't have to keep you from achieving your dreams! Afraid to shop around for a loan and further lower your credit score? Now you can be initially pre-qualified free of credit inquiries! We work with lenders that don't obtain your credit report until after you've been initially pre-qualified! That can mean freedom from multiple credit inquiries and you keep your credit score up! Bankruptcy, foreclosure, judgments, charge-offs, medical bills, no credit, bad credit, turned down, etc.—we can help! Today, turn your dreams into reality.
A Home Equity Line of Credit is like a credit card. You can borrow money up to your credit limit, and you only get charged interest on the portion that you borrow. You can pay down the balance, then reuse the credit. Most have a draw term, usually 5 to 10 years, where you can draw money out, then the loan is paid back over a 10 to 15 year period. You may also elect to refinance the Equity Line and get another 5 to 10 years to use the line of credit. You choose what you want to do with your home equity line of credit: - Remodel your home
- Take a vacation
- Consolidate bills
- Buy a car, boat or RV
- Finance tuition or other expense
- Use it as an emergency fund
There are many features of HELOC loan programs. Ask your Loan Officer to help you decide which is best for you. - Great Rates: rates can be below the prime rate on some programs.
- No Loan Fees: No appraisal fee or closing costs.
- Convenient Closings: Some programs allow doc signing in your home.
- Credit lines or maximum loan limits vary with each program.
- Pricing varies with the LTV.
- Accessing the cash in your credit line can be done by writing a check, charging on a credit card or making a withdrawal at a financial center.
- Many of these programs have an early termination fee.
- Some programs may offer a fixed rate loan option feature, where you can lock in a fixed rate on all or a portion of your outstanding balance.
- Pricing is based on your Credit Score. These cutoff limits are fairly strict, so if your score is just below the next higher range, you may want to discuss how to improve your score with your loan officer.
A HELOC is usually 100% tax-deductible*, and a smart way to consolidate debt, pay for home improvements, new automobiles, student loans or even vacations or weddings.
You may prefer a home equity fixed rate loan compared to a HELOC. Home equity fixed rate loans offer a wide variety of amortization periods (length of time to pay it back), more choices for people with less-than-perfect credit, fixed rates so your rate can never go up and the interest paid may also be tax-deductible*! * It is recommended that Customers consult their tax advisor. Not all loan fees or interest payments are tax deductible.
Financial Access Corporation
100 Stony Brook Court - Newburgh, NY 12550
Office: (845) 562-5000 - (800) 257-1331
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