OPTION ARM
An option adjustable rate mortgage (Option ARM) seems wise early on, since borrowers' first payments are quite low. If the adjustable interest rate goes up, so do the payments. A disciplined borrower can take advantage of initial low rates to pay down the principal on the mortgage; however, most buyers pay only what they must. The option ARM appeals to young buyers who are betting that their salaries will escalate along with their "flexible" interest payments, and they're betting that their home values will escalate as well.
MORTGAGE GLOSSARY
|
Historical Federal Funds Rate
*National Rates
|
