| Callers and prospective clients often ask me, "Would | | | | for home improvements and debt consolidation for a |
| you put your mother in an Option ARM?" I used to | | | | monthly minimum payment of about $275. That's |
| point out that my mother made two mortgage | | | | equivalent to the fully amortized payment on a loan of |
| payments a month on a 15 year mortgage and paid it | | | | the same size with Zero Percent Interest. You heard |
| off in 10, because she knew she was going to live in | | | | me right. |
| her house forever. But when it came time to cash out | | | | Of course your mileage will vary with your credit |
| to make some major home improvements on her | | | | history and the amount you are borrowing with |
| beautiful old Tudor, we selected an Option ARM. A | | | | respect to the appraised value of your property, but if |
| very different kind of Option ARM. | | | | you have a credit score of 620 or above and have at |
| Many of you have read our articles about the Hybrid | | | | least 25% equity in your home, you probably qualify for |
| Option ARM or Fixed Option ARM mortgage. The | | | | this type of program. It's not quite as cheap as the |
| phones at both East and West Coast offices have | | | | start rate on the Option ARM, but it is a lot easier to |
| been ringing so much that the owner of the company | | | | understand and more stable to boot. The payment is |
| is even fielding calls from customers on his personal | | | | fixed for a period of time, as is the interest, and you |
| number due to all the volume overloading the lines (you | | | | can make payments to principal whenever you want |
| might get lucky and get him if you call, he waives | | | | just like a regular Option ARM, but without the monthly |
| application fees for anyone who gets him directly). Just | | | | rate variations. And it has a 15 year equivalent |
| like the hundreds of callers who reach out to us each | | | | payment option on the payment coupon. Guess which |
| day, my own mother saw the sense in the Hybrid | | | | one my mom likes to use? |
| Option ARM value proposition. | | | | If you guessed the 15 you're right, but now that she's |
| That's because unlike a standard Option ARM, the | | | | on a more limited income than when she was working, |
| Hybrid has a fixed interest rate and payment for a | | | | having the flexibility to make a minimum payment when |
| period of time ranging from 3 to 10 years, and even | | | | necessary helps her during expensive seasons, like the |
| after the fixed period is over most of them retain an | | | | Holidays (spoils the grandkids like you wouldn't believe), |
| interest only option. Now they don't have 1% start | | | | or my Dad's birthday! And with the cash she pulled out, |
| rates, but they do start anywhere from the high 3s | | | | all of her credit card debt has been paid off and |
| (for excellent credit like my dear old mom) to the low | | | | consolidated, so her monthly expenses have actually |
| 5s or equivalent. You can generally expect a minimum | | | | decreased, even though she's been able to upgrade all |
| payment option on a Fixed Option ARM to have a | | | | of the floors, fittings and furnishings with the balance of |
| payment of about 55% of the interest only payment | | | | the money. |
| at the rate of the note. In my mother's case, she | | | | She loves it. I love her. Hey she's my mom. And if |
| locked in for 10 years and was able to pick up $100K | | | | she's happy, I'm happy. |