An option ARM mortgage is a great option that lets you make one of many different types of payments on your mortgage. This can help you manage your monthly bills much better than some other types of loans. The option ARM mortgage is geared toward people who want to own their property for a short time and and are looking for flexibility in their monthly payments.
One of the benefits of the option ARM mortgage is that it is available for many more people than some other types of mortgages due to its lower qualifying rates. It typically has a very low introductory rate and can let you make smaller mortgage payment initially. You have two different payment methods that can help you pay off your mortgage quickly.
First there is the minimum payment method. This type of payment will keep your first year of payments at your initial interest rate which is usually very low. After the year is up however, you will need to make much higher payments because if you continue to pay the minimum payment, it might not even cover the interest which will lead to that being deferred to your principal owed. This can be shocking for people but there is a payment cap in place that will limit how much it will increase each year.
The interest only payment is an option that lets you avoid ever having your interest deferred to your principal. The amount of the payment changes every month based on an index so it may increase or decrease each month. This option will usually not be available if it will cost you less per month than the minimum payment method.
A great thing about option ARM mortgages is that lenders offer many different types of programs that you can choose from. If you decide you like the features of the option ARM mortgage, make sure you carefully shop around and look at all the various programs that are offered.
If all of this is confusing, contact your lender or real estate agent and arrange for some thorough assistance to help you decide what choice is best for you. This can all depend on the type of property, your income, what you intend to do with that property, and what time frames are best for you in terms of mortgage length.