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.

Second Mortgage Loans
A second mortgage is a loan that is subordinate to another loan taken against the same property. They are called subordinate ...

How Option One Mortgage Loans Work
In a regular mortgage, the borrower pays a specific amount each month in order to pay the mortgage off in full by the end of ...

When Is A Second Mortgage Loan A Good Idea?
A second mortgage loan is a loan taken after the first mortgage, with the property used in the first mortgage as collateral. ...

Option Mortgage Loans What You Need to Know
If you are a homeowner considering using one of these ultra risky option adjustable rate mortgage loans, you need to understa...

100% Mortgage Loans - All Your Loan Options
Basics There are many loan types available at 100% financing, including:30 year fixed30 year fixed, interest only40 year loan...

Florida Refinance Mortgage Loans
Refinance mortgage loans are an effective way to decrease the debt on existing loans. Whether it is a credit card debt or a d...

Bill Consolidation Mortgage Loan Deciding If It Is Right For You
There are many different types of bill consolidation loans that are out there for you to choose from. Your particular situati...

Payment Option ARM: Getting a Second Mortgage Behind a Negative Amortization 1st Loan
Over the last several years, payment option adjustable rate mortgages (ARMs) have become very popular among homeowners thinki...

Mortgage Loan: Option Adjustable Rate Mortgages
Option Adjustable Rate Mortgages are a useful financial tool for financially savvy homeowners with a high tolerance for risk....

Option Arm Mortgage Loans: How Do They Work?
Typically, option arm mortgage loans give the consumer four payment options each month - a 30year fixed payment, a 15 year fi...

Negative Amortization Loans: Are these Mortgage Options Armed and Dangerous?
A conventional mortgage with a thirty-year period would be amortized over the thirty years. The monthly payment to the lender...

Refinancing Mortgage Loan Options - How to Refinance and Keep Your Terms
Refinancing can save you money, but the downside is that you have to restart amortization. Once again you are paying mostly i...

3 Things to Watch Out For With a Cash Out Refinance Mortgage Loan
A cash out refinance mortgage loan is a great option if you have accrued a lot of equity in your home. If you owe $75,000 on...

Bad Credit Second Mortgage Loan: A Good Answer to all Your Financial Demands
Bad credit second mortgage loan is like exchanging your first mortgage for a new mortgage. But, the question may arise in you...

2nd Mortgage Loan After Bankruptcy - Should You Get a 2nd Mortgage?
A second mortgage loan after a bankruptcy is a valid choice for some people. With your home as your collateral, a home equity...

California Mortgage Brokers and Lenders Loan Approvals with Good or Bad Credit
Mortgage brokers have the ability to locate the perfect home loan for your credit type. Before lenders began offering a ran...

Mortgage Calculators Can Help You Find the Right Loan
With dozens of mortgage options available to finance your home loan, how do you know which option is the best value for your ...

Why Are People Going Crazy for 1% Payment Option Mortgage Loans?
Exotic 1% mortgages are not just a financing fad. In our changing market, from unprecedented low rates to a steady rising of ...

Mortgage Loans: Understanding Rate Locks
Depending on the mortgage lender you choose, you will have several options when it comes to locking-in your interest rates an...

Commercial Mortgage Loans - Throw Away Your Financial Woes
Dream and passion to own & manage a business is a common attribute found in young populace. And, in order to set it up and ma...