MTA Home Mortgage Loans

MTA Loans; What is the MTA?

MTA loans use the 12-Month Treasury Average Index. The 12-MTA is based on average annual yields on U.S. Treasury Securities adjusted to a constant maturity of one year, as made available by the Federal Reserve. Historically, MTA mortgage loans have not exhibited sharp interest rate increases such as those that occurred in the late 1980s. Additionally, unlike more volatile indices, the 12-MTA has never increased more than .25% in any month for over a decade.

MTA loans are offered by Virginia Mortgage Services through our lending partnerships with 300 lenders and offer many MTA loans, to our clients throughout 48 states. This is a very popular ARM index among mortgage lenders but there are many differences between the MTA ARM programs .

Virginia Mortgage Services can properly explain the differences among the lenders offering the MTA home loan and help you decide which loan would be best for your situation. By becoming an informed home buyer your decision as to which, MTA loan program best meets your need, may save you thousands of dollars down the road.

MTA Loans vs. Other Adjustable Mortgage Indices

The index for MTA loans is a very slow index. The index is nearly as stable as the world's most stable index, The Cost of Savings Index or COSI loans . However, MTA loans generally have better margins which are fixed through the lifetime of the mortgage. Payment rates can range from 1% to 2.95% for the MTA ARMS. Because the MTA is an average annual yields on U.S. Treasury Securities there is an inherent "lag" in the index which ultimately causes the index to move very slowly. Again, in any given month the index has never raised over .25% for the last decade.

MTA adjustable home mortgage loans have several advantages. Flexibility in the monthly payment: It is one of the main advantages of MTA ARMs. With MTA adjustable home mortgage loans you will have a choice of monthly payment options. You have the ability to change payment options each month.

1. Full principle and interest
2. Minimum payment options - This payment option can range 1% to 1.95%
3. Interest only payment option
4. 15 year amortization payment option

All MTA mortgage loans have a 5 year payment recast. A payment recast is when the lender calculates the payment necessary to repay the loan over the remaining 25 years. This is done by adding any and all deferred interest, also called negative amortization, to the remaining loan balance and amortizing the payment over the remaining 25 years.

For example, A MTA loan starts at $200,000. After 5 years there has been $15,000 in deferred interest, your new loan will be $215,000 at the then current rate, amortized over the remaining 25 years. So, if your payment started at 1% or $643, in year one and rates were at 6.75% or higher, after year five, your new payment would be $1,485, or higher.

This, in my opinion, is the only major drawback with MTA mortgage loans. Virginia Mortgage Services prefers Option Arm loans that do not recast or at least have a 10 year recast. Please contact us at Virginia Mortgage Services to determine if one of our many Option Arm loan programs is right for your mortgage needs.

Why Consider an MTA Adjustable Mortgage?

There are many reasons a home buyer may consider an MTA home loan. Each reason being unique to the home buyer. In the past Virginia Mortgage Services has recommended varying low payment option arm's for:

• Debt Reduction: Monthly savings can be invested or used to pay off credit cards or to start or augment your savings and investments.
• Asset Accumulation: It is a good mortgage if you have a need to accumulate more assets, or the need to fund retirement accounts (higher return on your investments).
• Self Employed Home Buyers: MTA loans are a good fit for self employed home buyers who own their own business, have a fluctuating income, or live on commission.
• Jumbo Home Buyers: It has advantages for jumbo home loans (over $417,000 in value). *Some MTA loans are convertible to a fixed rate mortgage, for a small administrative fee and may assumable.
• Flexibility in your monthly payment - you will have a monthly choice of payment options.
• Financial Savvy Home Buyers: MTA loans provide more opportunities for financially savvy borrowers who seek more customized and ultimately less costly home-finance choices.

Want to calculate your low MTA mortgage loan monthly payment? Take a look at our MTA loan payment calculator! Start now by filling out our secure online loan application for MTA loans! Call us at 800.961.9121, Monday through Friday from 9 a.m. to 5 p.m. Eastern time or via email at anytime!

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