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Revolutionary Fixed Rate Option Arm Mortgages
ove it or hate it, the low payments of an Option Arm.
Payment Option ARM or Pick These home loans go by many
a Pay mortgage has become names, including Hybrid Option &
one of the most popular home Fixed Option Arms, but they have
loans in the USA, and is one thing in common: A fixed
definitely the fastest growing payment for several years. Some
option in high cost states like of these mortgages have fixed
California, New York, New Jersey interest rates, some of them have
and Connecticut. While many fixed minimum payments which
people love the 1% start rates, don't go up, and some of them
there are a lot of people who have both!
don't feel comfortable with the
possibility of payments So what are the key benefits of
increasing in as little as 1 Hybrid ARMs?
month on many of the most common
programs. The common wisdom is - Fixed Minimum Payments for 1,
that Option ARMs are incredible 3, 5 or 7 years
products for savvy homeowners and - Fixed Interest Rates for the
investors, but may be too Full Term on Many Programs
powerful for the average - Minimum Payment is typically
homeowner to handle. 55% lower than a Regular Loan
- Increased Cash Flow, Decreased
Introducing Hybrid ARMs Risk Makes Housing Affordable &
Secure
For the rest of us, an innovative - Interest Only Payment Option
class of new loans has been Continues Even After Recast
recently introduced for - Greatly Reduces the Sticker
homeowners who want the security Shock of a Fixed Mortgage
of a Fixed Rate mortgage, with - Greatly Reduces the Payment
the flexibility and exceptionally Shock of an Adjustable Mortgage
- Greatly Reduces Negative monthly payment would be about
Amortization $800 dollars, about 55% of the
- Retains Flexibility of an cost she was paying previously.
Option ARM And both rate and minimum payment
would still be fixed for 3, 5 or
Like an Option ARM, Your Payment even 7 years. In fact Jane could
Coupon Has 4 Options on it take out $100,000 in cash out
when she refinanced and she would
1. Minimum Payment still have a minimum payment of
2. Interest Only Payment $1200 per month, and both rate
3. 15 Year Fixed Amortized and payment would remain fixed
Payment for 3, 5, or 7 years.
4. 30 or 40 Year Amortized
Payment But Do I Qualify?
A Real World Example Because of the very low effective
rate of this financing and the
Your Minimum Payment is generally very generous terms, these types
55% of what a regular fixed rate of loans are generally available
mortgage would cost. Let's take a only to borrowers with credit
look at a hypothetical scenario. scores of 620 or more. If you
Jane has a house in California don't know your credit score, you
which has been appraised for should call your loan officer and
$400,000 and has a traditional find out. Other things to look
fixed rate mortgage on the out for are any late payments on
property of $200,000 on which she your mortgage in the past 1 to 2
pays $1467.00 per month before years, and of course any serious
taxes & insurance. If Jane were delinquencies like liens or
to refinance this mortgage into a judgments on your credit report.
Fixed Option ARM, her minimum Also, you will usually be limited
to borrowing no more than 80% to We've had so many questions from
95% of the value of your home. consumers and success stories
And if you talk to your loan from our customers who have used
officer and they haven't done a this loan, that we have decided
lot of Hybrid ARMs, get a new to publish a series of articles
mortgage company, because there to inform our readers about this
are a lot of ways they can steer new category of products, and
you wrong simply out of ignorance will be covering a variety of
(which we cover in a few of our topics including some of the most
other articles on the subject). common and some of the most
These Hybrid loans are very new, creative uses of this financing,
very powerful financial tools and as well as a detailed look at the
are best handled by those with benefits and risks of this type
extensive experience with the of mortgage as compared to
product. traditional fixed mortgages and
Option ARMs.
But Wait There's More!
About the Author:
Tristan Hunt is a seasoned financial professional with a wealth of experience in the mortgage industry, advising clients on Debt Consolidation & Refinancing. Phone: 800-515-8443 Website: http://RefinanceOne.net
Read more articles by: Tristan Hunt
Article Source: www.iSnare.com |
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