What an Option ARM Loan Can Do For You

Option ARM loans are a type of adjustable rate mortgage loan that provide the borrower payment flexibility. Option ARM loans give the borrower a choice on payments each month.

Your Options

  • To follow the traditional route and lower your final payout you can pay a portion of your principal and an interest rate on a regular schedule over a fixed period of time. If you have the money to do so, choose to pay consistently over 15 or 30 years.

  • If you have enough money to cover the interest rate on your option ARM loan each month, but have nothing left over to cover the principal, choose the interest-only payment. Your final payment will not increase or decrease.

  • If money is tight, choose to pay the minimum payment each month. The minimum payment may be lower than the interest rate and is available for tougher months. Paying the minimum will result in paying higher interest on your final payment.
No matter the option that you choose, know that option arm loans will give you very low initial interest payments. If you do not have secure finances, choosing an option arm loan may not be the correct path. For more information check out the United States Federal Reserve Board's website on adjustable rate loans.