12 MTA stands for the 12 Month Treasury Average. It is a relatively new index, and is the twelve-month average of the monthly average yields of US Treasury securities.
If you are looking for a newer alternative to COFI, then you will probably be interested in a 12-MTA. It fluctuates a little more than COFI, but their general movements are very similar. Like COFI, 12-MTA has the potential for negative amortization, which may increase your loan payment greatly if interest rises dramatically.
Loans that use 12-MTA
You can use a 12-MTA mortgage just like any other Adjustable Rate Mortgage. As an Adjustable Rate Mortgage, you can take advantage of the 12-MTA index’s fluctuations. Some similar mortgage index alternatives to 12-MTAs are are COFI, COSI, and LIBOR.
12-MTA Mortgage Benefits
With a 12-MTA Mortgage you have the option of when you pay larger or smaller payments. If you have wide variances in you income, this may prove to be a deciding factor for you in choosing this loan. With a 12-MTA your first three months of payments are at a low, fixed rate. In the fourth month, you can choose to pay the principal and interest, pay just the interest, or pay less than the actual interest each month. The last option keeps the monthly payments very low. The 12-MTA offers borrowers maximum flexibility and control in their repayment schedule.
How can I get a 12-MTA Mortgage
You can get a 12-MTA Mortgage by clicking here.
How can my FICO/Credit Score effect my mortgage rate
Your FICO or Credit Score has a dominating effect on your mortgage rate. Many sites let you do this for free. If you score between 720 and 850, you have a good credit score (AKA A-Paper). Many lenders will not work with you if your score is below 660, but the definitive cutoff between A-Paper and Sub-Prime or Non-Prime lending is 620. If you are below 620 you might want to learn how to improve your credit score.
A few more tidbits…
- The MTA is sometimes referred to as 12-Month Moving Average Treasury (MAT)
Q: Will my interest rate only change yearly if I choose a 12-MTA Index?
A: No, it will still change monthly like other ARMs. The 12 Month part refers not to an average of the calendar year, but to the average of the twelve months previous to the one you are in.
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