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Financing > Flex Options ARM Mortgages
Option ARM Mortgages
Please note that the rates featured in the survey
below are NOT for option ARM mortgages. We are not
aware of any mortgage providers who are still offering
flex option are products. For information on mortgage
prgorams and services available in your area, contact
some of the companies listed in the survey.
Option
ARM mortgage programs allowed borrowers to choose
from up to four payment options (often a 30 year,
15 year, and an interest only option, plus a minimum
payment option based on a rate as low as 1.00% for
the first year). This final choice resulted in negative
amortization and the consumer could end up owing more
on their mortgage than they would prior to their payment.
Option ARMs came under a great scrutiny as they played
a major role in the mortgage and real estate metldowns
from 2005-2010. Many people benefited from these products
in the earlier part of the decade as real estate prices
grew rapidly 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 increasingly more lenient, and homeowners were
either not well educated of the potential risks or
elected to ignore them. Many homeowners found themselves
trapped underwater in these programs as real estate
prices dropped and mortgage
rates began rise. Default rates on flex option
ARM mortgages are and were well above average. We
do not know of any lenders who currently offer option
arms.
Learn more about the pitfalls
and benefits of option ARM loan programs.
