I-Rates For Cars

Option Adjustable Rate Mortgages or so called “payment plan” loans are especially troublesome for many homeowners. These loans allow the borrower to choose their payment amount each month from four options:
1. The lowest being a minimum payment amount that does not cover all the interest due that month.
2. The unpaid interest is added on to your loan balance which results in a phenomenon called “negative amortization.”
3. Negative amortization means that your loan is actually growing over time instead of being paid down the way a mortgage is supposed to be paid.
4. When your growing loan balance reaches 125% of what you originally borrowed, the mortgage blows up in your face and the payments skyrocket.

These risky option ARM loans are popular because it’s very easy to qualify for these loans. If you are a homeowner with poor credit refinancing might not be an option; however; if you are able to refinance you should get out of this loan immediately. Choosing a mortgage with a fixed interest rate will give you predictable mortgage payments that you can plan your budget around. You will begin paying down the balance the way a mortgage was intended.

If refinancing is not an option for you, there are steps you can take to protect your home. The first thing you should do is stop making the minimum payment. Carefully review your loan contract to find out when your mortgage will be re-cast, resulting in a higher payment amount. Option arms come with adjustable interest rates; once the option period ends the mortgage lender will adjust your loan’s interest rate at regular intervals which could raise your payment amount.