An Overview of Option ARMs

A flexible new Adjustable Rate Mortgage program

There’s a unique loan program called “Option ARMs” that has been getting lots of press lately. While these Adjustable Rate Mortgages (ARMs) have been around for years, the current market climate of low interest rates and steadily appreciating real prices has made Option ARMs an attractive program that many lenders are heavily marketing.

The program is an Adjustable Rate Mortgage (ARM), with “options” for how you make your payment every month. You can pay the minimum amount due, to maximize your cash flow, or if you have a good month, you can pay more toward your principal to pay off your loan faster. These are different from interest-only loans, in that they offer more payment choices and flexibility; some attractively lower than standard interest-only programs.

These programs are designed to be extremely flexible for borrowers. The interest rates vary by program, but people usually choose these loans for financial planning purposes – rather than for the interest rates. Option ARMs aren’t for everyone – they’re a fairly sophisticated program that requires financial acumen and responsible cash management. But for the right borrower – these programs can be an integral part of your financial plan, allowing you to control and maximize your investments.

To understand Option ARMs, the following factors are important to evaluate:

• Payment options with the program
• Interest rates and rate caps
• Your specific situation and plans

Option ARMs are incredibly flexible programs, which allow people with an inconsistent monthly income to control and manage cash flow and tax obligations. People who choose Option ARMs might have high-commission sales jobs, own a business, or be real estate developers - borrowers who are financially savvy and can use the benefits of the program to their advantage.

Please call Bauer Mortgage Group if you’re considering an Option ARM from us or any other lender. There’s a lot to know about Option ARMs and it’s essential that you know ALL of the facts about a program, both pro and con, before signing a deal. We have spent lots of time recently, researching this subject, talking to lenders and understanding the subtleties and complexities of Option ARMs and we are happy to share this with our valued E-News readers.

When you contact Bauer Mortgage Group, we will review your goals, your situation and will provide you with all of the information that you need to make an informed decision about applying for an Option ARM.

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Karen Wimer, Branch Manager
Bauer Mortgage Group
170 State Street
Portsmouth, NH 03801
603-430-7729
888-25BAUER