Negative Amortization Option ARM Mortgage

Lenders Nationwide announces the Option ARM Hybrid Loan. Borrowers benefit from a low introductory loan payment that is fixed for 5 years with the opportunity to select several different payment options. Shop brokers and lenders online for today's rates and terms.

Important Hybrid Option ARM Features:

  • The Mortgage Rate is Fixed for the first 5 years of the home loan
  • Borrower's minimum payment will be calculated at the “Interest Only payment based on the mortgage note rate minus 3%
  • Borrower may be eligible for 4 payment options each month for the first 5 years of the loan or until the Negative Amortization balance cap peaks
  • Negative Amortization is capped at 115%
  • Primary Residence, Second Homes and Investment properties are eligible
  • Stated Income and Full-Doc documentation types are eligible
  • Maximum loan amounts up to $2,000,000 on Primary SFR and Second Homes
  • Maximum loan amounts to $1,000,000 for Investment Homes
  • Minimum credit score starts at 620 fico
  • Up to 100% CLTV home financing (80-20)

Find a Local Broker or Mortgage Lender in your neighborhood! Search for mortgage lenders and shop interest rates with the top home mortgage lenders online. Get free quotes for 100% mortgages and Zero-Down home loans with featured programs for bad credit, interest only and negative amortization. Lenders Nationwide is committed to providing superior mortgage loan products to all applicants with a premise of fair lending. It is Lenders Nationwide’s policy to treat all of its applicants and borrowers fairly and in accordance with federal fair lending and equal credit opportunity laws throughout the loan process.

Mortgage Rates Remain Low

If your loan includes an escrow impound account, any changes to the cost of your real estate taxes and insurance could affect your total monthly payment amount. The interest rates offered are subject to change. Actual payments will vary based on individual client situation and current rates. Not available in all states. All loans are secured by a lien against real property and not all applicants will be approved. Annual Percentage Rate (APR) includes points, lender fees and some third party fees. Assumes excellent credit for all applicants, no cash out to the borrower, prepayment penalty where allowed, and full income documentation. Maximum loan limits and minimum equity/down payment requirements apply. Other restrictions may apply.

The Risks of Negative Amortization Option ARM Mortgage Loans by M. Ny

Negative amortization loans, also known as deferred interest loans, neg am and payment option ARMs (adjustable rate mortgages), are home financing options that have payment adjustment caps in addition to interest rate adjustment caps. This means that even though the loan's interest rate may increase, your payment will generally stay the same. As housing prices skyrocketed, these loans became more popular because they gave homebuyers more power to purchase more house for a lower initial cash outlay. The intro start rate also makes house payments more affordable for the first few years of the loan.

How Negative Amortization Occurs

A mortgage is largely figured by using the loan amount, the interest rate and the number of years to pay back the loan. Traditional mortgages consist of monthly payments to cover interest and a gradual reduction of the principal (amortization). With negative amortization loans there are payment caps that limit the amount of payment increases, but not interest-rate increases. As a result, the minimum payments do not even cover the monthly interest. The shortfall is automatically added to your loan balance, causing the principal balance to increase rather than decrease.

Neg-Am and Option ARM Risks

If you make the minimum payment, in addition to the unpaid interest being tacked onto the loan balance, additional interest may be charged on the shortfall. So, the deferred interest can take your equity and cause you to owe more than what the house is worth over time.

Comptroller of the Currency John C. Dugan said regulators are especially concerned about negative amortization loans in real estate markets entering down cycles: "If real estate prices decline -- and there already is evidence of softening in some markets -- these borrowers could face the bleak prospect of loan balances that exceed the value of the underlying properties." Dugan and other regulators are also worried that many people may not fully comprehend the impending payment shock when the loan adjusts to fully indexed payment.

The federal financial regulatory agencies express concern over the fact that these low payment home buying options are offered to a wider spectrum of buyers who may not otherwise qualify for a similar-size mortgage under traditional terms and underwriting standards. And, institutions are increasingly combining these loans with other features that may compound risk ("risk layering") including reduced or no documentation loans, and the 100% 1st mortgage, also known as a no money down home loan or 80-20 loan because of the typical 1st mortgage that covers 80% of the purchase price and simultaneous piggyback 2nd for the 20% balance.

Mary has published many notable mortgage loan articles ranging from She recommends the following mortgage lenders for getting a purchase, refinance or second mortgage. Check out 100% Negative Amortization Loans and for a 2nd quote take a look at home mortgage loans with bad credit. It never hurts to get 3 quotes, so for more information, please visit Neg Am Experts.

Article Source: http://EzineArticles.com/?expert=Mary_Ny

 

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