choose a loan program

[gregory]

Hello,
Jumbo loans require a great amount of intelligence when choose a loan program.

A 1 million dollar loan for instance, the borrower is not going to choose a long term loan such as a 30 year fix or 15 year. There would be no point because they would end up paying millions in interest over the span of that time.

The right loan for Jumbo Amounts would be an Option Arm, if the property is in an area where the appreciation rate exceeds the negative amortization. Option Arm is also know as pick your payment because you have the choice of picking how much you would like to pay each month. As low 1% to about 5.5% depending on the situation.

This is the best investment strategy for a property of that size. If you choose to pay the minimum of 1% monthly, the loan amount does amortize and increase, but is countered by the appreciation rate especially in California. Other loans that may be just as appealing would be interest only loans on a 2/3/5/7 Year Arm
Regards
Gregory

 

[harrison]

Hi Gregory,
I agree with you for the most part. Except "millions in interest" is a bit extravagant don't ya think? It would be around $1.2mm which is still a ton of money!!! The option arms are great if you know what you're doing. You also have to know to watch the indexes on which these rates operate off of. The California areas, I'm not too keen on. I don't believe there's too much appreciation left in most areas there. Where was the last new build??? Where's the new commercial property??? Are the lower income areas the next target for development??? CA's overrated. I've done loans there, it was fun, made a lot of money. Have to say it's almost more trouble than it's worth anymore.
Cheers
Harrison