California Monthly Payment Option

This loan is for the savvy borrower looking to take control of their monthly cash flow. The Payment Option ARM offers 4 different payment choices every month. With this hybrid loan you will receive a monthly statement with 4 payment options available for the month. This allows you to choose based on your cash flow needs for the month. You can pay the minimum payment in order to cover other expenses for the month, an interest only payment, a 30 year payment, or if you would like to accelerate the payoff of your loan there's a 15 year payment option.

The following is a more detailed breakdown of the typical monthly payment options for this type of loan:

- Minimum payment - This payment is based on the initial introductory rate, which can be as low as 1%, and amortized at this rate for the first 12 months before being recast. Any unpaid interest will be differed, or added back to the balance of the loan.

- Interest only payment - This payment covers the cost of interest for the month and is a cheaper payment then the fully amortized 30 year payment. This option does not reduce the balance of the loan nor does it add to the balance like the minimum payment option.

- 30 year fully amortized payment - Standard 30 year payment based on the fully indexed rate of the loan. If this payment is made every month the loan will payoff on schedule.

- 15 year amortized payment - Standard 15 year payment based on the fully indexed rate of the loan. If this payment is made every month the loan will payoff in half the time.

Below is an example of a monthly statement with a $400,000 Payment Options ARM:
*Based on 5.62% fully indexed rate.

Minimum Payment at 1%	Interest Only Payment	30 year Payment	15 Year Payment
$1,287.00	$1,871.00	$2,297.00	$3,287.00

This loan is great for many reasons. For instance, you may have an income that fluctuates monthly, be self employed, or just need a lower payment option for a few years. This is also a great purchase loan for borrower seeking a lower or flexible payment option for their first few years of ownership. Most lenders will allow an interest only equity line of credit second mortgage to go along with this loan, furthering your total purchasing power.

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