Fixed Rate Option Payment Mortgages - The newest twist to the option payment mortgage are loan products that offer fixed rates of interest in addition to the low payment options that are also fixed for various periods. This eliminates some of the risk of the more traditional option payment ARM loan, especially in rising interest rate environments.

Financially savvy home buyers often prefer Fixed Rate Option Payment mortgage over conventional financing. They use it to maximize leverage, increase purchasing power, and lower monthly mortgage payments.

A fixed rate option loan can be a tool to manage your finances. There are times when a person's cash flow may have it's highs and lows. A fixed rate option loan will allow you to determine how to plan for those times.

With a Fixed Rate Option Payment Mortgage, you would have an option to choose 1 of 3 different payment amounts during the initial period. One, you could make a fully amortized payment, paying both principal and interest. Two, you could pay the interest only and pay no principal. Or three, you could make a minimum payment based upon a lower interest rate. If you choose the third option, the difference between an interest only payment and your minimum payment would be added onto your loan.

One feature of a fixed rate option payment loan is that the borrower can calculate exactly how much interest will be deferred during the intial option payment period. Because of this, in a sense this type of loan becomes really no different than a second mortgage or cash out refinance where the borrower knows precisely how much their principal balance is being increased.

This program is often referred to as a Hybrid or Secure Option Arm. This does provide the flexability of the different payment options as well as some stability knowing that your rate will be locked for a period of time.

Fixed Option Arm - Most people have heard of the Option Arm or Pick A Pay loan. A newer product is now out that provides the flexibility of payment options and also the security of the margin and index being fixed for a period of time.

The availability of 30 year fixed rate loans with minimum payment options allows even the most conservative long term homeowner to experience the added flexibility afforded by minimum payments

While the exact terms will vary by lender, the interest rate on a fixed or hybrid option ARM will remain constant for a set number of years. In many cases between 3 and 5 years. After the initial fixed rate period the interest rate will become variable, with the length of time between adjustments varying by lender.

A fixed option arm loan will keep the payment the same on all payments. This way the borrower will not have to worry about their payments fluctuating each month. The rates and payments will typically be higher than adjustable option arm loans.

Many investors prefer a hybrid option arm because the payments are fixed for a certain amount of time, and the low payments mean increase cash flow. A savvy investor can plan his investments with enough accuracy to never have to pay a higher payment by flipping the property before the fixed rate period expires.

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