Option ARM Mortgages
No Longer Available

Option ARM mortgages were programs that allowed borrowers to choose from up to four payment options every month (typically a 30 year, 15 year, and an interest only option, plus a minimum payment alternative based on a rate as low as 1.00% for the first year). This final option led to negative amortization where the consumer would actually end up owing more on their mortgage than they would prior to their payment. Option ARMs have come under a great deal of scrutiny in recent years as they played a role in the mortgage and real estate problems of 2005-2010. Many clients benefited greatly from these loans in the earlier part of the decade as real estate prices skyrocketed and homeowners enjoyed tremendous appreciation while they kept their payments at a minimum. The problem, like with most riskier loans of that era, was that people in the industry got more greedy, qualifications became more relaxed, and homeowners were either not well educated of the potential risks or simply chose to ignore them. Many consumers found themselves stuck in these programs as real estate prices plunged and rates began to tick upwards. Default rates on option ARMs are and were well above average. We do not know of any lenders who offer pick-a-payment option arms at this time. Today, traditional fixed rate mortgages and longer term (3-10 year), fully amortizing arms are back en vogue and for good reason. AAXA still has access to interest only loan programs (in most states) and adjustable rate loan programs so that you can keep your payments at a minimum. Give AAXA a call today for a free quote and consultation.

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