Option Arms
being in the mortgage industry i have learned quite a bit lately about this new phenomonen, its not real new, but with all the flipping going on a lot of people are starting to get in to these.
Basically you can have a rate of 1% for the first month on your mortgage or 1.75 for the first 3 months, and your payment stays fixed for 5 years. By doing this however your loan becomes negative amortizing depending on what payment option you choose. I feel like this is very risky, but if you are going to flip the house and only hold on to for a few months this is the way to go. |
negative amortizing in that your loan amount becomes larger? Did I understand that correctly?
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