Option ARM and the Hybrid ARM
The option ARM is an adjustable rate mortgage program in which the interest rate adjusts monthly, but the payment adjusts on a yearly basis. Borrowers with this type of loan are given payment options. The borrower is usually allowed to choose from an interest only payment, a fully amortized payment, and a minimum payment which can lead to negative amortization.
These types of adjustable rate mortgages are attractive to borrowers because of their initially low payments, which helps borrowers qualify for a larger home loan. The lower monthly payments also enable you to use your money for investment or other purposes.
The hybrid ARM is a type of an adjustable rate mortgage that has a fixed interest rate for a certain period of years in the beginning of the loan. The most common hybrid loans have a 3, 5, 7, or a 10 year fixed rate period. After the initial fixed rate period, the rate adjusts on an annual basis.
Hybrid adjustable rate mortgages are an excellent choice for borrowers who wish to have a low monthly payment and plan to live in their homes for a relatively short period of time.
Florida Adjustable Mortgage Rates | Pennsylvania Mortgage Rate
