Option One Mortgage Loans ? Getting an Option ARM or Option One Mortgage Loan

Have you heard about or been interested in finding out more about option one mortgage loans? They are becoming very popular, but its important to understand how they work before you apply for one. I will describe, in this article, an overview of the most common type of option ARM mortgage loan or option one mortgage loan.

How do they work? Option one mortgage loans are basically interest only mortgage loans, except that the first year, you pay only 1.25% of the interest on the loan. The remainder of the interest that is accruing is being added to the loan amount. The second year of the loan you pay more interest until gradually you are paying either full interest only payments or fully amortized payments (interest & principle). The reason the loans are called option loans is because every time you have a payment due, you have the option of paying the less than interest only portion, interest only or a fully amortized payment. This option would be good in a situation where your income is sporadic.

This mortgage loan type typically gives you 4 payment options in every bill.

Here are your typical monthly payment options:

Option #1 ? Pay a 15-Year fully amortized payment amount (p&i)

Option #2 ? Pay a 30-Year fully amortized payment amount (p&i)

Option #3 ? Pay the interest-only portion of the loan (Interest Only)

Option #4 ? Make a partial interest payment (1.25% - 1.95% depending on your loan type) and defer paying the additional interest to the total loan amount. (Deferred interest can be counteracted by making bi-monthly payments and by property appreciation)

This type of loan is good if you want to:

Wait a while to refinance again ? If interest rates drop again, so does your payment. If you want to accelerate your payments and increase equity quick, pay more on your loan and it will be applied to future payments & will be directly applied to the principle balance. Will you want a 30-year loan? Keep the option to pay your loan as a 30-year, 15-year, or interest only payments.

Have an adjustable rate mortgage but want stability ? This loan has a payment cap. The interest rate on this loan is based on the 12 month-MTA index, the most stable index of the 4 main indexes (COFI, LIBOR, MTA & CMT). This index is always below prime. The interest rate is based on the world economic markets which have been steadily coming down over the last 3 years. This loan has a 5-year fixed payment option as well.

Invest your payment savings in something else ? This could open up opportunities for you if you could invest in real estate, the stock market or another investment when you use the extra $500-1000+ a month you free up from your property payment. Pay off debt with your payment savings ? You can use the payment savings to pay off other debt.

Have security and options in your mortgage loan ? The main benefit to this type of loan is the security of a mortgage payment that you control. You decide at any time what kind of a mortgage you want. If all goes well in your future, you have the freedom to pay your 30 year loan into a 15 year loan without even consulting another mortgage broker. Get more home for your money ? You can qualify for more home with these low payment options.

Who Can Qualify? Qualifying for this loan is basically the same as any other loan, it is based on credit, equity & assets, if you are strong in 1 of these or 2 of these, you could probably qualify and with lowest rate possible.

What if I want to take out a stated income loan? "Stated Income" or "No income/assets" loans are possible with this Option One Loan.

These are just general guidelines and information about this type of loan. You will want to discuss all of these details with your broker or lender before you actually complete the loan. These factors may vary with each individual lender. Many lenders do not offer their customers this type of loan. If you are seeking an option one or option ARM loan, you will need to talk to your broker about it or find a broker that can do this type of loan. To see our recommended lenders for this type of loan. Visit here: Option One Mortgage Lenders.

Written by Carrie Reeder, Owner of ABC Loan Guide. Carrie's website is an informational mortgage loan website. Her website has articles and a list of recommended mortgage lenders for many different types of mortgage loans.

---

How Much Home Loan Can I Afford?

Have you ever asked yourself how much home loan can... Read More

Escrow Accounts, Do You Absolutely Need One?

With escrow accounts the money for your home insurance and... Read More

Subprime Mortgage Loans Online - What To Expect

Applying for a subprime mortgage loan online can seem intimidating... Read More

Stopping Foreclosures

If you as an investor understand the process, you will... Read More

Why Choose a Home Equity Loan?

There are many reasons for choosing a home equity loan.... Read More

Mortgage Advice

In the US today more households have mortgages than ever... Read More

Refinancing Online - Tips For Getting a Low Interest Rate When Applying Online

Refinancing online is a great opportunity to find low interest... Read More

Home Equity Loan ? Beware of Equity Stripping Scam

The market for mortgage refinancing has been brisk during the... Read More

Getting a Home Improvement Loan: What Your Bank Needs

The popularity of stores like Home Depot and Lowe's show... Read More

Refinance Mortgage Rate and Mortgage Rates

Refinance mortgage rate is the best rate available to qualified... Read More

Cardinal Principle of Homeowner Personal Loans ? It is a Solution for Any Sort of Financial Funding

You bought a house and you were promoted to the... Read More

What is a Homeowner Loan?

If you are a homeowner, it couldn't be easier to... Read More

Bad Credit Mortgage Lenders - Things You Should Know About Subprime Lenders

Interest rates and fees vary between subprime lenders just like... Read More

What is a Remortgage?

A remortgage is changing your mortgage without moving your home.... Read More

Multi Family Property Living

While most multi family properties are designed to allow the... Read More

Guide to Interest Only Mortgages

Here is a useful guide to interest only mortgages. An... Read More

Save Time With a Bridge Loan

Why You Need a Bridge LoanYou have to move fast... Read More

Bad Credit Mortgage Loans ? How To Get Approved

Persistence is the key working toward getting approved for a... Read More

The Real Truth About Those: Online Get a Better Loan Web Sites - 6 Things to Look For

You have seen the Commercials on TV go this or... Read More

Mortgage-Refinance Loan Can Put Cash in Your Pocket

Do you need cash? Here's a mortgage for you. If... Read More

How To Get The Best Home Equity Loan

Are you wondering how to get the best Home Equity... Read More

Remortgage ? When Monthly Mortgage Payments are Touching New Heights

Current economic scene has hinted towards a fall in the... Read More

Say Yes to ISA Mortgages for a Convenient Mortgage Repayment

Customers who opt for an interest only mortgage, and feel... Read More

What Exactly Is A Reverse Mortgage And How Does It Work?

A reverse mortgage is a certain loan that allows the... Read More

Home Mortgage Loan Refinance ? Benefits To Refinancing Your House Online

Here are some of the benefits to doing your home... Read More

Helpful Mortgage Advice

Mortgage advice overwhelming you? Many people get advice from everyone... Read More

Refinance Mortgage Loan ? Tips on Refinancing Your Home Mortgage

Refinancing your home mortgage can come with some great perks.... Read More

Some of the Available Loan Types

There are many mortgage products available on the market today.... Read More

Mortgage ? What, Why, When, and How?

What is a mortgage? Here's what The New Merriam ?... Read More

Adjustable Rate Basics

An adjustable rate loan, most simply stated, means that your... Read More

Mortgage Refinance - Tips to Help You Cut Fees and Costs

Saving money through a mortgage refi is more than just... Read More

Understanding Mortgage Points

When a mortgage broker asks a borrower to pay points,... Read More

Buying a House or a Home?

A house is just that, a house, until someone lives... Read More