Options Trading Tutorial

What actual mortgage lenders (not mortgage brokers) offer the Option Arm?

Public Comments

1. First Horizon Home Loans
2. WAMU Countrywide But that doesn't mean you'll get any better rate or deal since you'll still have to go through their retail departments.
3. The option arm is probably one of the worst products out there..... be careful. It is a major contributor to our mortgage problems today.
4. The option ARM can be a great alternative. The problem with the option ARM is people continue to always make the absolute lowest payment possible at the 2% or less interest rate thus creating a Negative Amoritization problem. The Option ARM is designed to offer a borrower 4 payment options per month (by the way, you can do this owner occupied or non-owner occupied, but you need to be putting at least 10% down, 15-20% down as an investor) pymt. opt. 1: the lowest payment at 1-2% interest : " 2: a regular interest only payment at the going rate (say 6%) 3. a regular Principal & Interest pymt. based on a 30yr. loan 4. a regular Pprincipal & Interest pymt. based on a 15yr. loan. People were going after the option ARM much more heavily when the market was better & prices were going up more quickly. The object of the game was, even if I make the lowest payment possible, my equity is rising faster than my Negative amortizing position, so it makes sense. With prices falling out there, you're getting a double whammy in losing equity (unless, you're are making drastic improvements to a property creating much much more value & you only plan on holding the property for less than 2-3yrs) then the Option ARM may work just fine for you. You need to talk to a Direct Lender more about this & figure out if the Option ARM could specifically work for you in your area & even narrow down to , can this work on this specific property i'm interested in. btw I checked into this New Horizon Home Loan website, It raises a lot of red flags. Without a HUGE down payment & very high interest rates no reputable bank is going to lend someone hundreds of thousands of dollars based on "personal character references". Big red flag