Fixed Option Arm
Contributed Articles : Most people have heard of the Option Arm or Pick A Pay loan. A newer product is now out that provides the flexibility of payment options and also the security of the margin and index being fixed for a period of time.
The availability of 30 year fixed rate loans with minimum payment options allows even the most conservative long term homeowner to experience the added flexibility afforded by minimum payments
While the exact terms will vary by lender, the interest rate on a fixed or hybrid option ARM will remain constant for a set number of years. In many cases between 3 and 5 years. After the initial fixed rate period the interest rate will become variable, with the length of time between adjustments varying by lender.
A fixed option arm loan will keep the payment the same on all payments. This way the borrower will not have to worry about their payments fluctuating each month. The rates and payments will typically be higher than adjustable option arm loans.
Many investors prefer a hybrid option arm because the payments are fixed for a certain amount of time, and the low payments mean increase cash flow. A savvy investor can plan his investments with enough accuracy to never have to pay a higher payment by flipping the property before the fixed rate period expires.
This post has been filed under : option arm, hybrid
Disclaimer: The opinions expressed in the Contributed Articles section of this website may have been contributed by independent third parties and are not necessarily those of Envision Lending Group / Refinance One. Any enquiries regarding the content of these articles should be directed at .
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