Option ARM Loan - Option ARM mortgages, which allow borrows to defer or prepay interest at will by offering four monthly payment options, are known and marketed under a variety of names:

The following is an attempt to assemble a rather exhaustive list of all the names by which Option ARM mortgages and other mortgages with payment options are known:

5 Yr Hybrid Option Arm

5 Yr Fixed Option Arm

1 Month Option ARM

Flex 5

Neg Am Loan / NegAm Mortgage

Adjustable Rate Option ARM

Option Plus Loan

GPM

NegAm

Pay-Option ARM

If you are considering one of these loans, make sure you are living in an area with moderate gains and not using the minimum payment option every month because if you are making only a minimum payment you could possibly lose some of your equity due to negative amortization.

Hybrid ARM

Quicken loans smart choice loan

Pick A Payment

Flex Pay Option

Minimum Payment Option Mortgage

Pick Your Payment

Fixed Rate Pay Option

Power Option

Payment Advantage Mortgage

Cash Flow ARM

Cash Flow Option Loan

Negative Amortization Mortgage

Fixed Option ARM

COFI ARM

30 Year Fixed Option ARM

Quicken buyers advantage loan

Hybrid Option Arm

The Secure Option Arm

PayOption

Negative Mortgage

1 Month MTA Option ARM

Payment Option ARM

Secure Advantage Loan

Smart 30 Mortgage

Investor ARM or Investment ARM

COSI ARM

Deferred Interest Mortgage

Pay Option ARM

Option ARM

Fixed Rate Pick a Pay

1% Mortgage

One Percent Mortgage Solution

COFI, COSI, CODI ARM

Even thought the option ARM mortgage has many different names it is still essentially the same product from lender to lender.

Pick A Pay

Pros and Cons of Pay Option ARM loans - A Pay Option ARM loan is a very flexible mortgage loan. There are many benefits and drawbacks of these types of mortgage home loans. The main benefit of a pay option arm loan is that this type of mortgage provides you with the most flexiblity for making your monthly payments. You are given, usually, four payment choices each month to choose from. You can lower your monthly expenses significantly if you choose to make the lowest payment option. These types of loans are not right for everyone and you should consult a mortgage professional to see if it may be right for you.

A potential risk associated with Pay Option ARM is possible negative amortization. Negative amortization occurs when over time the loan balance is more than the original loan amount. When a borrower makes minimum payments, which is less than the interest accrued for the month, the interest left unpaid is added to the loan principal. Instead of pay down the principal, the homeowner can end up owing more than what he borrowed. In a real estate market where home values are unchange or even depreciating, negative amortization can be disastrous.

Option ARM's may cause "Negative Amortization" only if the appreciation is less than 3% per annum. If one is able to take the difference between the minimum payment and the full interest payment and put this amount into a tax free investment vehicle then one would be able to payoff one's mortgage that much faster.

Deferral of interest is definitely not for everybody, but for most people the ability to pay less than half of a standard mortgage payment to live in the home they desire is a more than compelling reason to consider payment option loans. Small minimum payments and deferred interest are siginificantly better alternatives to missing large conventional payments and losing one's home in foreclosure.

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