When to use Option ARM minimum mortgage payment?


Use the Option ARM minimum mortgage payment scarcely - only if you really have planned income increase in the next few years, or live in a high cost area and you can't really afford a house with another payment plan, or if you know you will refinance. Perhaps you could use the savings to invest, but for many borrowers this is not a viable approach.

The Option ARM minimum mortgage payment is one of the Option ARM possible payment plans. It is preferable that you acquaint yourself with the available Option ARM tools on the market.

Option ARM Minimum Mortgage Payment Requires Re-Amortization

There are different scenarios to have your loan recast if you are making minimum mortgage payments.

If you have a regular Pick-a-Pay ARM, your loan balance will recast to fully amortizing payments when the negative amortization cap is reached.

If you are using a Hybrid Option ARM, the recast may require that you start making interest-only payments for limited period instead of paying principal and interest right away. However, some Hybrid Option ARMs also require full amortizing payments after the recalculation.

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