Different Option ARM programs also come with different pre-pay penalty structures. Be sure to know what your pre pay period will be, if any, and what options you have regarding a pre payment penalty.

A nice feature of the Option Arm is the ability to make a minimum payment, an interest only payment or a fully indexed payment.

When getting into an option arm program take a close look at the index. When rates are rising its better to get into an option arm that has its index tied to the COSI, COFI or even the MTA. When rates are going down it may be better to use the LIBOR because it is a index of what is currently going on in the market.

While in other mortgages borrowers are generally shopping for the bse 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 & 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 thourough interview we can then place you in the proper loan program.