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Mortgage Refinance
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Pay Option Adjustable Rate Mortgage (ARM)
A Pay Option ARM offers the ultimate in financial flexibility. This program lets you choose from four payment options each month as your needs or your financial situation changes. An ideal loan for maximizing cash flow, the Option ARM can be a great choice if you are self-employed or require month-to-month financial flexibility for any reason.
After an introductory period of 1 to 3 months, your monthly statement will offer five payment options:
1. Minimum payment - The payment set by the start rate (usually 1.25-2.25%) on your loan. This amount can only increase 7.5% a year on most Option ARM’s.
2. Interest-only - You pay only the interest accrued for that month on your mortgage balance.
3. 30-year amortization – The payment needed to cover the accrued interest plus enough principal to pay the loan off in 30 years (from the opening of the loan).
4. 15-year amortization – The payment needed to cover the accrued interest plus enough principal to pay the loan off in 15 years (from the opening of the loan).
5. 40-year amortization – The payment needed to cover the accrued interest plus enough principal to pay the loan off in 40 years (from the opening of the loan).
