Cash Flow Optimizer Programs
(No Document Options Available!)
The Cash
Flow Optimizer series of loan programs represent
an exciting new type of mortgage financing. If
you are a foreign national planning on renting/letting
out your U.S. 2nd home, we strongly encourage you
to consider the dynamic benefits these programs
have to offer.
Low rates,
flexible month to month payment options, and some
of easiest qualification requirements have quickly
made these loans among our most popular. Please
review the below information, and then contact our
mortgage specialists to clarify any remaining questions
you may have.
The Basics:
Cash
Flow loans are essentially just like any other mortgage
you might already be familiar with except for
one dynamic difference; you
control how much you pay back each and every month.
Its a bit complex at first, but once you grasp the
idea, it is easy to see why there are quickly becoming
the most popular programs for home owners wanting
maximimum control over their cash outflow (especially
if you plan to rent the property out).
1. Your loan will have a very
competitive monthly variable rate, which is the
rate your interest will be calculated at:
This
rate is normally somewhere between 5.25% and 6.25%, depending on which of the document
classification (below) you prefer This rate
can adjust up or down each month,
based upon the published index it is attached
toYou, however, are not limited to paying
this rate's corresponding monthly amount, if you
do not want to
2.
Your loan will also even have a much lower minimum
monthly payment amount, which you can opt to pay
each and every month (or not) you so choose:
Depending
on the documenation type you select below, your
minimum monthly payment will be calculated as
if you had between a 1%
to 1.5% rate on your mortgage
This means
you can pay below 'interest only' during
any given month, and even over any successive
months, that you choose.
There is no requirement that
you have to pay this low amount, it is simply
an option you have, and a very valuable one, if
problems ever arise with your rental income
3.
Alternatively, your loan will also allow you to
pay down large portions of your whenever
you choose, with no penalty. Over payments
can either be in monthly, or lump sum amounts:
Your
loan will also allow you to pay far greater
than your monthly interest rate with
no penalty if you like: either $5,000
a month, or 20% of the total loan balance a year,
depending on which document type loan program
you choose
In
summary, imagine a loan that not only has a great
interest rate, but will essentially give you
the freedom to choose how much and when you pay
back funds throughout the year. It allows you the
best structure for having your outgoing liabilities
(mortgage payments) mimic the sometimes
uncertain inflow of funds (renter's payments) you
receive throughout the year.
Obviously, these
are more complex products than a typical mortgage
and you should also be aware of potential concerns
for your misuse of their liberal payment
options as well. Please see below:
in most cases, for example, we do not recommend
these loans for your primary residence, or properties
you know you will hold for over ten years.
We highly encourage you to speak with us regarding
both the special opportunities, and responsibilities,
which are inherent to these loans, before deciding
if they are right for you.
An Example Of A Cash Flow Optimizer
Program:
1.You
decide to borrow $250,000 for a new home purchase
2.You
decide to provide full documentation on your part
and receive a very low 5.385% monthly variable interest
rate.
3.You
decide to set the mortgage up on a 40 year term,
giving yourself the most flexibility in
your minimum monthly payment amounts
Then your mortgage will
provide you with the information you need to decide
how you wish to pay it back
Under this scenario, you would receive a
monthly statement from your mortgage provider
showing you similar information to what is
listed below, in order to help you
decide how much you want to pay:
Interest charged to your account for the
month was $1,121.88 (you can pay this amount if
you would like to make this an interest
only loan this month).
Or, you can pay as little as only
$632.14 back this month, and defer payment
of the remaining $489.74 of interest for another
time. (this is your minimum monthly payment
amount)Or, you can also keep your mortgage
on schedule to be paid off within a certain time
frame, if this is your goal, by making the
below principle and interest repayment amounts:
- 40 Year Repayment: $1,269.92 -
30 Year Repayment: $1,401.49 -
15 Year Repayment: $2,027.48
Or, if you've come into additional funds, you
can alternatively, for each of
the first three years of your
loan, pay up to 20% (or $50,000
on a $250,000 balance) of your loan balance off
at any point in the year with no penalty
(after 3 years you can pay off the entire balance
with no penalty).
In
reality, you have a nearly unlimited option of payments,
anywhere from $632.14 up to $50,000 of your loan
back, depending on what you, and only you, decide
to do.
The monthly statment they will send you each and
every month, with some of the different payment
examples listed above, is simply to help you
have the tools you need to make the most of your
financial management. You will also be encouraged
to set up an automatic payment withdrawl to cover
the minimum amount, thereby allowing you to sent
in extra whenever you so choose (see bi-weekly/automatic
payment).
Exciting Features:
Can be
paid off on anywhere from a 40 year to a 10 year
schedule
Can have 2nd and 3rd years of the pre-payment
penalty waived under certain situations
Can be set up with a bi-weekly
automatic payment option, which
under certain situations can actually eliminate
most of your deferred interest without you noticing
Important
Considerations:
There
are a few important facts to understand and be considered
before deciding to get a Cash Flow mortgage.
The highlights are listed below, but we must insist
you please ask your mortgage professional for clarification
of any points you do not fully understand.
We are happy to explain.
By making the minimum payment any month
(normally calculated at a 1.25% rate), you are
choosing to defer payment of the actual interest
(accuring at the higher monthly variable rate)
being calculated on your balance. You
are not permanently forgoing this interest, only
adding it to your loan balance until a later date
when you prefer to pay it.
The monthly variable rate can, and usually does,
adjust every month. In a rising
rate environment, this means the interest you
might be adding to your balance each month could
grow larger while you are making the same minimum
payment.
On most of our Cash Flow programs (see below)
the minimum payment option is only for
the first five years of the loan, and
the will raise your minimum amount slightly each
of those five years. An example would be
that for a $100 minimum payment in the first year,
your minimum payment would rise to $107.5 for
the second twelve month period. After five
years, your minimum payment will become the full
principle and interest payment corresponding to
your monthly variable rate, on a schedule of balance
reduction in either 10, 25, or 35 years.
(Please ask your mortgage consultant for an explanation).
Although
there are many important considerations, we do strongly
believe this is a superior loan product for the
savy investor wishing to maximize their rental return
on a second home. The ideal
client would not be planning on paying off the home
over a decade or longer, but would most likely be
expecting to sell the property for a net gain within
the next seven years. Please talk to your
mortgage consultant to determine if this is the
right loan for your situation.
Documentation
Options:
How much documentation you are willing to provide
to verify the personal information contained within
your application is the largest factor in determing
your down payment amount and interest rate.
Below are examples of the three main options we
have. Speak with your loan consultant if you
need more tailored options, and please visit our
rate sheet for
estimates of today's rates for each program.
1. No Document Option: Requiring
by far the least documentation on your part (often
just a copy of your passport is needed), this loan
typically requires at least a 30% down payment,
and also generally comes with a .75% increase to
the interest rate over our Premier product.
It allows a maximium of $5,000 or a minimum
of a 1.5% payment rate, each and every month you
decide
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