|
This dynamic mortgage product offers our clients the opportunity
and flexibility to strategically manage their cash flow by
offering four monthly payment options. As you know, traditional
mortgages such as a 15, or 30 year fixed rate mortgage, offer
a single payment choice that consists of principal plus interest.
After your lender deducts the interest portion due, the principal
is then invested by the lender, with no benefit to you.
| With the Power Option Loan you have
the option to select the payment method that best suits
your financial situation every month. Thus, it gives you
control over your loan payment. |
The Power Option Loan gives you the flexibility to decide whether
you would like to match your loan payments to your variable
or seasonal income, or whether you would like to put more money
into a business, investments, or large expenses like college
tuition. In essence, it gives you control over how you pay your
mortgage so you can do what makes sense - for you.
- Option One - A 15 year fully amortizing payment,
which allows you to accumulate equity in your home at a faster
rate. This would obviously create a quicker payoff and save
a substantial amount of interest over time.
- Option Two -
A 30 year fully amortizing payment,
which allows you to pay your loan off in a 30 year timeframe
as most families are accustomed to, yet take advantage of fluctuations
in the market with the Adjustable Rate nature of the program.
- Option Three1
- An interest only payment which
allows you to take full advantage of the potential tax savings
from a 30 year mortgage while investing or utilizing the principal
portion for retirement planning, college planning, debt consolidation
or any number of other needs that may arise.
- Option Four2 - The minimum monthly payment option has a lower initial interest rate than the other three options listed above for the first month of the loan. The initial interest and subsequent repayment rates depend on the investor you choose, credit, income and other market factors. The rate at which interest will accrue will change in the second month of the loan, as described below in How Is the Interest Rate Determined?. This option not only maximizes cash flow giving you more cash each month for other expenses, but also defers payment of interest on your loan. This may allow you greater flexibility in managing your tax deductions.* Use of this option (in making only the minimum payment due each month) will result in negative amortization on your loan.
1.Consult your tax advisor.
2.Option four - Use of this option could result in deferred interest. This amount would be added to your loan balance.
Payment options are subject to change and may vary depending on the program and lender.
All examples assume a 28% tax bracket and that mortgage interest is fully tax deductible. Thirty-year loan would require 360 monthly payments in the amount indicated. Interest rate may increase after consummation of loan. Other terms and limitations may apply.
The four options let you decide every month how to tailor your mortgage payments to achieve your short and long-term financial goals.
How does it work?
Every month, your lender will send you a monthly payment coupon offering you the four options discussed above.
The following example illustrates the four payment options available on a monthly payment coupon for a $200,000 mortgage. Each example assumes that the option presented is selected each month of the loan term.
___ MINIMUM AMOUNT DUE $ 698 1
____INTEREST ONLY $ 562 2
____30-YEAR PLAN $ 884 2,3
____ 15-YEAR PLAN $1,418 month 2,3
- This example illustrates the initial monthly payment for a $200,000 loan with a payment based on an effective first year interest rate of 1.58%. The interest rate is 1.95% in the first month, interest plus margin thereafter. Payment remains fixed for the first 12 months. This option may result in deferred interest which is added to your principal loan balance, which results in negative amortization. Interest rate adjusts monthly based on an index and margin and may increase. Minimum payment adjusts annually up to a maximum of 1.075% of the previous year's minimum payment. Projected composite APR over life of loan is 3.438%, based on initial interest rate, current index, and margin. APR may vary. The current index is 1.37%. Loan To Value Ratio of 80% or less.
- These examples illustrate the initial monthly payment for a $200,000 loan with an APR of 3.375% at closing. APR and payment are subject to change each month based on changes in an index and your loan balance and may increase. APR may vary.
- Payments under Options Three and Four include principal and interest. In addition to the information on the coupon, your monthly statement will also contain account activity that occurred since the last statement: i.e., beginning and ending balance amounts; previous payments; interest paid; current ARM interest rate; escrows/other, etc.
In addition to the information on the coupon, your monthly statement will also contain account activity that occurred since the last statement: i.e., beginning and ending balance amounts; previous payments; interest paid; current ARM interest rate; escrows/other, etc.
How Is The Interest Rate Determined?
The
Power Option Loan uses a monthly Adjustable Rate concept to determine the actual rate of interest charged. In the above example we used the Cost of Funds Index (COFI). Other commonly used indices include the Monthly Treasury Average (MTA) and London Interbank Offered Rate (LIBOR). Your loan expert will determine the index and program that best fits your individual financial situation. A fixed amount of percentage points (the "Margin") is added to the index which when combined with the indexed rate, established your effective interest rate and as such your monthly payment
Anyone who wants to take control of their monthly
cash flow and financial future. As noted, "The Power Option
Loan" gives you the flexibility to decide whether you would
like to match your loan payments to your variable or seasonal income
or whether you would like to put more money into investments or
toward large expenses. The choice is yours! Talk to one of our loan
experts about your financial goals and learn how the Power Option
Loan can help you reach them.
How The Power Option Loan Works
|
On July 18th WLG International (WLGI) was excited to enter into a new mortgage partnership with one of the most well-known and most respected mortgage industry brands - THE MONEY STORE®.