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    question, visit www.melphis.com

    Option 2: Interest only

    In this option, the borrower can pay the interest only payment based on the real note rate. If the real rate is 6% for a $100,000.00 loan, the monthly payment will be $500. With this option, the principal remains the same.<

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    I think it is necessary to clarify for mortgage prospects the characteristics of the 1% mortgage advertised in almost every mortgage advertising material. It is also referred to as a negative amortization loan.

    The 1% mortgage is a feature that allows borrowers to pay less that the required monthly payment. The real rate of the loan can be between 5 and 8%.

    How does it work?

    This type of loan is commonly called an Option ARM loan. By Option ARM, they mean that they give you many options. In the mortgage statement, there are four payment options

    To illustrate the scenario, we will take an example of the following loan

    Loan amount: $100,000, Note rate: 6%

    Option 1: Minimum Payment (1% or more)

    The minimum payment option allows you to pay on the 1% rate or the low rate advertised by the mortgage lender. For example: if you have a loan of $100,000.00, the minimum payment based on 1% would be $321.63 (This is fully amortized for a 1% mortgage). With this option, the customer has increased the loan balance by $178.37 because the interest only payment is $500 (See Option 2 for a better understanding).

    Any question, visit www.melphis.com

    Option 2: Interest only

    In this option, the borrower can pay the interest only payment based on the real note rate. If the real rate is 6% for a $100,000.00 loan, the monthly payment will be $500. With this option, the principal remains the same.<

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    quired monthly payment. The real rate of the loan can be between 5 and 8%.

    How does it work?

    This type of loan is commonly called an Option ARM loan. By Option ARM, they mean that they give you many options. In the mortgage statement, there are four payment options

    To illustrate the scenario, we will take an example of the following loan

    Loan amount: $100,000, Note rate: 6%

    Option 1: Minimum Payment (1% or more)

    The minimum payment option allows you to pay on the 1% rate or the low rate advertised by the mortgage lender. For example: if you have a loan of $100,000.00, the minimum payment based on 1% would be $321.63 (This is fully amortized for a 1% mortgage). With this option, the customer has increased the loan balance by $178.37 because the interest only payment is $500 (See Option 2 for a better understanding).

    Any question, visit www.melphis.com

    Option 2: Interest only

    In this option, the borrower can pay the interest only payment based on the real note rate. If the real rate is 6% for a $100,000.00 loan, the monthly payment will be $500. With this option, the principal remains the same.<

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    strate the scenario, we will take an example of the following loan

    Loan amount: $100,000, Note rate: 6%

    Option 1: Minimum Payment (1% or more)

    The minimum payment option allows you to pay on the 1% rate or the low rate advertised by the mortgage lender. For example: if you have a loan of $100,000.00, the minimum payment based on 1% would be $321.63 (This is fully amortized for a 1% mortgage). With this option, the customer has increased the loan balance by $178.37 because the interest only payment is $500 (See Option 2 for a better understanding).

    Any question, visit www.melphis.com

    Option 2: Interest only

    In this option, the borrower can pay the interest only payment based on the real note rate. If the real rate is 6% for a $100,000.00 loan, the monthly payment will be $500. With this option, the principal remains the same.<

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    have a loan of $100,000.00, the minimum payment based on 1% would be $321.63 (This is fully amortized for a 1% mortgage). With this option, the customer has increased the loan balance by $178.37 because the interest only payment is $500 (See Option 2 for a better understanding).

    Any question, visit www.melphis.com

    Option 2: Interest only

    In this option, the borrower can pay the interest only payment based on the real note rate. If the real rate is 6% for a $100,000.00 loan, the monthly payment will be $500. With this option, the principal remains the same.<

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    question, visit www.melphis.com

    Option 2: Interest only

    In this option, the borrower can pay the interest only payment based on the real note rate. If the real rate is 6% for a $100,000.00 loan, the monthly payment will be $500. With this option, the principal remains the same.

    Option 3: 30-year Payment

    In this option, the borrower can pay the 30-year payment which is $599.55. This option is fully amortized; the principal balance decreases every time you choose to pay 599.55. On the 1st payment, you would decrease the principal balance by $99.55.

    Option 4: 15-year Payment

    This is the best option when you have available cash flows. That allows you to pay off the debt faster because it is amortized over 15 years. Under this alternative, the monthly payment is $843.95. Every payment allows you to decrease the principal by a minimum of $343.95.

    Remarks:

    This loan is not for every one.

    It is recommended for people that are self employed or real estate investors that have unstable cash flow projections. They have the option of making the minimum payment when they have cash flow problems. It can also be a good alternative for people that are struggling to make their mortgage payment. However, the loan officer needs to explain clearly that you have a higher balance after the 5-year grace period if you only make minimum payments.

    You can consider the minimum payment option as a lin

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