How Do I Manage Cash Flow With A Cash Flow Payment Option Loan?
Basics A cash flow payment option loan is a mortgage that allows you to pick your payment each month. This option to choose your monthly payment is usually offered for three to 5 years, although this changes from lender to lender. Your monthly payment options are generally: • 15 year loan payment • 30 year loan payment • interest only payment • minimum payment Each month you can choose which payment to make. If you want to pay less in one month you can choose the minimum payment option. If you want to pay more in a given month you can pay a higher amount. In this way the abiltiy to choose your monthly mortgage payment allows you to manage your cash flow better. Interest Rate The interest rate on this loan type is usually based on: • interest rate index • margin The interest rate index is typically a third party interest rate index, such as the LIBOR index or CODI index. These are independently determined indexes. In this way your lender doesn’t control the interest rate and how it chan
