What Is an Option ARM?
It is an ARM on which the interest rate adjusts monthly and the payment adjusts annually, with borrowers offered options on how large a payment they will make. The options include interest-only, and a "minimum" payment that is usually less than the interest-only payment. The minimum payment option results in a growing loan balance, termed "negative amortization".

Option ARMS are a viable product for a select few loan customers. Be sure to take the time to fully understand the pros and cons of an option arm prior to taking one. A properly used pay option arm is a great loan for many clients.

Option ARMs are generally good possible loan options for consumers who are self employed, who are commissioned or who have seasonal income and they need some flexibility in their mortgage payments. These types of consumers can benefit from being able to make lower monthly payments to their mortgages when they need to and then they can make larger monthly payments when they are able to.

An option adjustable rate mortgage (ARM) will have a low initial interest rate that adjusts after the initial period. The low interest rate and payment can help provide cashflow and allow you to afford a larger
home.

Option Arm loans are great for securing financing to flip a property. You can maintain maximum cash flow with the minimum payment each month until you successfully sell your property.

 

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