Posted by Brian (WA) on January 26, 2005 at 10:03:37:
Daniel,
Option ARMs typically don’t have a five year fixed interest rate although you can calculate your payments to be fixed. If your start rate is 1.75% it would be for the first year only. Second year payment would increase with a cap of 7.5% to the payment. The same would follow for the third, fourth and fifth year until you reach the fully indexed rate.
I encourage all my clients who use the minimum payment option on a regular basis to make one extra payment sometime during a 12 month period. Doing this will keep the loan from going into deferred interest or neg am.
I can do a 12 MAT option arm to 90% CLTV (combined loan to value) on N/O/O properties. 80% first option arm with a 2% start rate and a 10% second HELOC with 10% down and the typical 2% seller contribution.
Option arms don’t follow conforming guidelines for loan amounts. For example this particular scenario the maximum loan amount on 80% first is 650K. Can go even higher still with the max loan amount of 800K although the LTV on the first would be 75% but the CLTV is still 90%.
Can you guys beat a hybrid option ARM…fixed for 5 years @ 1.75%, then recast to the MTA with a 25 year term. Of course there is a neg am set for 110% which would null and void the 7.5% cap, but as long as I don’t reach for the ceiling then I’d be just fine. The only problem I have here is that this program only allows for 80 LTV on a NOO. The property I’m attempting to get under wraps is less than $350,000 which is well within conforming guidelines, so I’m wondering what else is on the table.
Thanks again for your input.
db
Posted by Allan Beraquit on January 24, 2005 at 18:56:57:
Dan,
Sounds like you like to buy-hold-and sell within a few to 7 years. That?s my game as well. How about 100% NOO Financing Full Doc or Stated Income? First Mtg. Only without PMI.
No combo 1st & 2nd with a short am and ridiculous rate on the 2nd.
Structure the deal properly, and the seller can pay closing cost, leaving you to only fund prepaids (Insurance, etc.). Will do ARM or Fixed, with our without a prepay penalty. We lend in most states. Work primarily with investors who are volume minded and will work a price point fair to all involved, including your end buyers.
Re: NOO, Max LTV, Min PP, FICO’s high 7’s - Posted by Brian (WA)
Posted by Brian (WA) on January 24, 2005 at 17:26:08:
Daniel,
If you can do a full doc loan (documenting income and assets) with your scores you can get 100% CLTV (combined loan to value) single family up to fourplex with no prepayment penalty.
If you have to do a stated loan (verify employment but not document income, just state a believable income) you can get 100% financing as long as there is positive cashflow. Hard to do in certain areas of the country. Chances are if you want no prepayment you’ll have to settle for 95% CLTV.
NOO, Max LTV, Min Prepay, 5 years, FICO’s high 7’s - Posted by Devon Daughety
Posted by Devon Daughety on January 24, 2005 at 13:36:14:
Depends, what CLTV are you looking for… when you say “option” ARM… option ARM’s change monthly, therefore are not 5 or 7 year ARM’s. Do you mean interest only?? What State