Payment Option Arm Mortgage

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Mortgage that allows an option for multiple payment amounts.

Your most affordable payment is on the option arm. This program gives you several mortgage rate and payment options to base your monthly payment from.

1. Minimum rate of between 1% and 4.5% depending on program
2. Interest only rate based on the margin and index rate
3. Fully amortized rate and payment

Understand Option Arm

To understand this, the 1% mortgage rate is minimum payment amount, kind of like a credit card minimum payment. The Interest only option is based on the margin, which is the amount of profit the lender needs to make, somewhere in the neighborhood of 2.5% - 3.5%. Then the index. The current index for the MTA option arm is - 0%, when you add the two together(2.5% + 0) you come up with 2.5%, this would be the rate your interest only mortgage payment would be based on. The fully amortized payment would be based on this rate as well. As the MTA adjusts, so does the monthly payment. There are other option arm mortgage programs available, we use the MTA for this because its so common. If all you made was the minimum payment each month. Then the difference in payment between the minimum due, and the interest only payment would be added to the loan balance each month. So if minimum was $500 and I/O payment was $900 then, $400 would be added to your mortgage balance.

This may sound terrible, but if you do the math, you actual can save more money and earned more in appreciation in the right market, compared to what you will actually spend on a non-negative amortization or option arm program


Payment Option Arm

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