Editors Note: Due to the mortgage and credit crunch, option arm mortgages are more difficult to apply for and get. If you’re in need of a Denver mortgage/home loan contact us to discuss your mortgage options.

Although there are multiple things to consider when comparing option ARMs here are few of the basics. Loan term initial interest rate - or start rate. Initial interest rate period - or commonly referred to as introductory period. For example with a 1 month option ARM the initial interest rate is for the first month only. Periodic adjustment – how often the interest rate will increase.

While in other mortgages borrowers are generally shopping for the base rate with the least points, option arms are a little more complicated. You should examine the index and margin. The index is the variable portion of the rate, do some research about the various indexes to determine which will be fit your lifestyle best. The margin is the fixed portion. As with anything make sure when shopping you compare apples to apples, compare margins on the same index, etc.

Different lenders will follow different indices. Some follow the MTA and some even have there own indices such as the COSI or CODI.

When comparing option arms make sure to compare the lender fees. Often times lenders have the same programs but the fees can be different.

The margin, index ampersand closing costs will all reflect into the APR but an Option ARM is more difficult because you must find everything that you are looking for. Such as how much will your payments increase each year and what is the payment rate (1%, 1.5%…). After a thorough interview we can then place you in the proper loan program.

Is your rate too high? Get a rate quote on a Denver Mortgage Loan now!

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