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These neg am/option ARM programs are great when rates are falling,
stagnant or in a low interest/low volotility enviroment, but I'd
not recommend them for this interest rate enviroment to anyone Tom,
Dick or Harry.
All of these types of loans, regardless of who is underwriting it are
based upon a 1 month ARM. While your minimum payment are preset for up
to 5-10 years, the I/O, 15 YR FXD, 30 YR FXD, etc. are changing every
month.
As interest rates increase, so does the neg am accumulation and the
likelihood for recasting.
The fully indexed rate of most option ARMs are on par or slightly lower
then what the 30 YR FXD is being offered.
Most lenders/brokers like them because you can make big YSP on the back
and still offer a rate between 1-2.99%.
This is the last loan a newbie should be selling, unless they fully
understand all that is at play with this loan type.
Regards,
Scott Miller
National Commercial and Residential Lender/Broker
Carteret Mortgage
1.877.716.6495
EZMortgageLoanz@aol.com
www.RealEstate-IQ.com
www.EZMortgageLoanz.com
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Re: Secrets of the Option ARM Loan (Newbie Guide)
