Option ARM Program

Option Arm loans come with four (4) payment options. Depending on interest rates you will receive the option to make either one of these payments upon receipt of your mortgage statement. These loans also usually include the following measures to reduce your risk of rising interest rates.

• A fixed interest rate for an initial 1-month period
• A minimum payment amount that adjusts on an annual basis
• A 7.5% payment change cap*
• A lifetime interest rate cap

*The payment change cap limits how much the minimum monthly payment can increase or decrease from the previous minimum payment. Many lenders make exceptions so this cap is not in effect during the fifth year of your loan and every five years thereafter.

Option 1: Minimum Payment Due
Gives you more money to work with each month. The First year's minimum payment is based on the initial start rate. The minimum payment for the year will be established annually. At each subsequent annual adjustment, the minimum payment is based on the chosen Index plus margin. Payments limited to a 7.50% adjustment annually. (e.g. - if your minimum payment is $1000, the highest you will pay in the 2nd year is $1,075. )

Option 2: Interest Only Payment
Pays all interest for the current month. Payments remain manageable with no change in your principal balance for the month. No deferred interest occurs with this choice.

Option 3: 30 Year Fully Indexed Principal and Interest Payment
Pays off your loan within the 30-year time frame. Fully amortizing 30-year principal and interest payment. Payment based on the chosen Index plus margin, which is calculated monthly. No deferred interest occurs with this choice.

Option 4: 15-Year Full Principal and Interest Payment
For the fastest equity build-up (leading to a quicker loan payoff). Fully amortizing 15-year principal and interest payment. Payment based on the Index plus margin, which is calculated monthly. No deferred interest occurs with this choice.