Option One Mortgage Loans - Getting an Option ARM or Option One Mortgage LoanHave 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.
MORE RESOURCES updated Fri. April / 19 / 2024 Average Mortgage Interest Rates: Mortgage Rates by Credit Score, Year, and Loan Type Business Insider How To Get A Home Equity Loan With Bad Credit Bankrate.com 15-Year Mortgage Refinance Rates: Compare Current Rates Business Insider With property values strong in 2023, many homeowners tapped home equity lines of credit, pushing total HELOC ... Biloxi Sun Herald 30-Year Mortgage Refinance Rates Business Insider Mortgage Interest Rates Today, April 16, 2024 | Rates Remain Elevated After Last Week's Spike Business Insider Mortgage Interest Rates Today, April 15, 2024 | Rates Are High, But They Still Could Drop This Year Business Insider The best mortgage lenders for refinancing in April 2024 CNN Underscored 280 Park Ave.'s owners refinance mortgage and pay down debt Crain's New York Business Best Mortgage Refinance Lenders of April 2024 Business Insider Current Student Loan Interest Rates in April 2024 Business Insider How To Refinance A Rental House Bankrate.com Mortgage Rates Chart | Historical and Current Rate Trends The Mortgage Reports Current mortgage refinance rates CNN Underscored MBA: Mortgage Applications Increased in Weekly Survey Calculated Risk Best Mortgage Refinance Lenders In 2024 Bankrate.com Mortgage Refinance Rates: Compare Current Rates Business Insider When to Consider Refinancing Your Mortgage Business Insider Mortgage Rate Forecast April 2024 Bankrate.com 30-year refinance rates: What to know CNN Underscored Mortgage Interest Rates Today, April 14, 2024 | Will Rates Still Go Down This Year? Business Insider Refinance Requirements: What You Need to Refinance Your Home in 2024 The Mortgage Reports Mortgage Rate History: 1970s to 2024 Bankrate.com Current 15-year refinance rates — and lenders that offer them CNN Underscored Should You Refinance Your Mortgage In 2024? Bankrate.com How Soon Can You Refinance a Mortgage? NerdWallet Refinancing a Home Equity Loan (2024 Guide) MarketWatch Will Mortgage Rates Go Down in 2024? What Homebuyers Should Expect Business Insider Best Refinance Lenders of April 2024: Refinance Your Mortgage The Motley Fool When to Refinance Mortgage: Is it Time? - Buy Side from WSJ The Wall Street Journal Pros and Cons of a Cash-Out Refinance Bankrate.com Should I Refinance My Mortgage Now? When to Refinance As Rates Drop Business Insider What Credit Score Do I Need To Refinance? Bankrate.com Office of Research blog: A look at cash-out refinance mortgages and their borrowers between 2013 to 2023 Consumer Financial Protection Bureau Veterans Are Refinancing Their Homes Newsweek Should You Refinance Halfway Through Your Mortgage? Bankrate.com The Best Mortgage Refinance Rates in Canada NerdWallet Current mortgage interest rates: Mortgage rates today CNN Underscored Refinancing - Learning Center Zing! Blog by Quicken Loans 10-year refinance rates: What to know about the current market CNN Underscored
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