On 7 Apr 2005 07:56:33 -0700, "OptionARMpopeye"
wrote:

OPTION ARM

Option ARM Basic Description:

The Option ARM or Option Adjustable Rate Mortgage is a new innovation
in the mortgage marketplace that may very well replace the standard
fixed rate or adjustable rate mortgage as the frontrunner for mortgage
seekers.

Very basically the way an Option ARM works is that you have an
extremely low interest rate for the first 12 to 36 months of the
mortgage. You pay that interest plus the loan amortizes at the 30 year
rate during the Low Rate or Intro period. Many home owners can cut
their mortgage payment in half during this period. After the intro
period expires, no worry, you will generally have a margin from (2.5
-3.75%) over your Index. Indices are usually in the (1.85 - 3.75%)
range occasionally they may jump to as high as 6%. So your effective
interest rate will generally fluctuate between 3.35% and 7.5% and may
jump as high as 9.5% for those with lesser credit during an abnormal
fluctuation in the index rate. Still no worry, most Option ARMS are
capped at 9.5% and have yearly caps of 2-2.5%.

Here is the real beauty of this type of ARM, each month you will
receive a bill with a Minimum payment which reverts back to the
original percentage, an interest only payment where all you pay is the
interest and do not amortize the loan at all, a fully amortized option
where you pay interest and principal at the 30 year rate, or an
accelerated payoff payment where you pay interest and principal at the
15 year amortization rate.

Looks like a way for many undisciplined people to really screw up
their lives while enriching their real estate agents.