I get asked versions of this question all the time: "Andrew, Im really big on the interest only concept, but I just cant see why anyone would want to do a Pay Option Arm mortgage. Think about it, if youre not even paying down the mortgage on the house and gaining equity, why in the world would you do it?" If you really understand the concept of Interest Only, you should be JAZZED about the Pay Option Arm. Basically, the POA takes the Interest Only concept to newer heights. The ironic thing is the POA was around before the big Interest Only craze. The main issue of the question dealt with the concern on equity, so lets focus on that and break it down. First of all, what is it? According to Dictionary.com, equity is: the difference between the market value of a property and the claims held against it. Pretty standard, wouldnt you agree? Great, now why is equity a good thing? Most people probably say its a good thing because it means value. The more equity you have, the greater value you have. Right? If you just agreed with that last statement, we are not thinking the same. Dont get me wrong, equity is a great thing, if its used properly. I would love to take credit for this next statement, but I cant. But I liked it so much, I wrote it down. Equity does nothing for you unless you convert it to cash flow. LOVE THAT STATEMENT! And it makes perfect sense for this article. Whether you work in the mortgage business or not, if you truly understood the power of the Pay Option Arm, you would know how to use it in your favor. Im not talking about using the POA to free up cash to pay off other bills, thats POA 101. Im talking about taking actual equity, convert it to cash, have it benefit you.BEFORE YOU EVER AQUIRE IT! Dude, thats cool. How is can that be accomplished? Simple, if you know and understand the power of the POA. AND, to top it off, there are some versions of the POA mortgage on the market that have a built in equity accelerator option, but thats a whole different topic all together. Thinking about this stuff and getting that deep-down understanding is whats going to set you apart from the average Joe Mortgage Person and making you wealthy. But, youll have to decide to do that on your own. Andrew Poletto. |
