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7 Reasons To Use Pay Option ARMs To Finance Your Investment Property

by: Fred Hopkins

Have you heard about all the bad press about Cash Flow ARMs, Pay Option ARM, Smart Loans and all the other variations of loans with negative amortization? A lot of it is warranted! This loan is a tool and just like any tool, there is a right way to use it and a wrong way!

Most people that get Pay Option ARMs do it simply to get a lower payment on the house that they live in. They couldnt afford it any other way. They finance the house to the hilt and suddenly they get upside down when that balance starts to increase!

Pay option ARMs are a good choice when your home is seeing good appreciation (5% or more) because this type of loan has the ability for negative amortization (the loan balance can actually increase over time). In this case the amount of appreciation will easily out pace any increase in the loan balance.

Pay option arms are good for property that you are financing under 90% of the value. In fast appreciating markets you can get away with a higher amount but leaving 10% equity in the house is bare minimum. Why? Well, If you sell the house through traditional means, your selling cost could be anywhere from 9-15% of the sales price! No one likes the idea of having to come out of pocket to get rid of a house! You want to make money!

Real estate investors can find some of the biggest benefits in using pay option arms. When you take a property that fits some of the criteria mentioned previously, using pay options will afford you the following:

1. Payment Flexibility Just like the name of the loan states, you have different payment options. One, you have the payment based on the start rate of the loan (which could be as low as 1%!). Two, you have the interest only payment. Three, there is an option to make a payment based on a 30 year term. Lastly, the fourth pay option is based on a 15 term. The last 2 pay options allow you to pay down on principle if you choose.

2. Maximize cash flow Cash flow is the name of the game when dealing with rental property and pay option arms are one of the best ways to maximize it. Used correctly, pay options arms can over DOUBLE the cash flow on your property!

3. Minimize affects of vacancy - Everyone who owns rental property has had vacancies. If you havent yet, just wait you will! One month vacancy, depending on the property, can just about destroy the profit for an entire year! Dont believe me? Go ahead and add up the holding cost for carrying the mortgage, utilites, cleaning, and a little touch up paint and see what you get. If you had a way to reduce the largest expense, the mortgage, by a third, wouldnt that soften the blow? Again pay option arms are the way to go!

4. No more worrying about unexpected repairs In the same regard as the vacancy example, you will be better able to shrug off the effects of an unexpected repair because your cash flow has over doubled.

5. Give incentives to tenants for good behavior You can be very creative here. Credit for paying before the first of the month (for example payment by the 25th). Discounts on longer term leases such as an 18-24 month lease, etc. The extra cash flow from using a pay option arm can stabilize you turn over and give you tools to help you with tenant retention, especially in competitive markets!

6. Leverage the property to payoff personal bills If you cash flow from switching to a pay option arm goes from 0 to 0 a month, you can use that extra money to pay off your car, credit cards, student loans, whatever.

7. Save the extra income to buy more property! Better yet, start saving that extra cash flow to buy more property! You will use pay option arms, collect more cash flow and use that to buy even more property! Then your business feeds off of itself without you having to use your salary for your 9 to 5 to fund it!

There are more than seven good things to mention about pay option arms but I thought it would be a good start. We wont even get it to the tax benefits! For more information about Pay Option ARMS, go to www.mountaintopmtg.net/investor-pay-option-arms.

Own A Vehicle At Low Cost Finance On Taking Used Vehicle Finance

Remember 9 tenths of the civil law is possession.

Pay off the installments in time as this way your credit score will go up. Like any unsecured loan, bad credit history unsecured loan is offered for a limited amount and interest rate is higher. You can easily own a used vehicle in case a new model is out of your reach. With the critical items, the consequences of non payment can either be very high and/or occur very quickly, e.

This type of loan is secured by accounts receivable or inventory and is available from a bank or an Asset Based Lender.
A popular way to fund a business are Business Angels. If you havent yet, just wait you will! Some of you may want to buy a newly launched Mercedes or a home with a landscaped garden or want to fulfill any other desire. Apply online unsecured loan gives you adequate amount at the time you need the most.

In addition to the cash flow, tangible and non-tangible assets of the business will influence Market Value.
Why? Are you facing hurdles in availing loan at your terms and conditions so that you get the much desired finance at low cost? It can also help increase your profits, and at the end of the day that is what it is all about. Be flexible. You may have been tough with yourself in the cost section, but the other dimension to the budget is of course income. The rate of interest on low rate secured loans remains lower always.