ALL OPTION ARMS SEEM THE SAME
Option ARMs are also known as "Pick-a-Pay Loans" because every month you get the option of picking any one of three payments:

• Minimum Monthly Payment -- based on the Payment Rate
  
• Interest Only Payment -- based on the Note Rate
  
• Interest plus Principal Payment -- payment includes Interest plus Principal

YET ALL OPTION ARMS ARE NOT CREATED EQUAL
There are a lot of new varieties of Option ARM loans

• Hybrid Option ARM - NEW
  The Hybrid Option ARM combines the stability of a Fixed Rate Loan with the flexibility of the Option ARM. The Hybrid Option ARM has a period of 5 to 10 years of a fixed interest rate with a minimum pay rate as low as 2%. The minimum monthly payment is fixed for 5 years. You must have good credit and no more than an 80% LTV.

• Traditional Option ARM (Wall Street)
  This is the 1% loan everyone raves about. These loans have a minimum pay rate at 1%, and the note rate can fluctuate monthly. The minimum monthly payment can go up each year. You must have good credit, no more than an 80% LTV, and you can qualify with stated income. These loans are all sold to investors on Wall Street, and as a result they are not very flexible in their underwriting guidelines.

• Traditional Option ARM (Portfolio)
  This loan offers the most flexibility for unusual situations. Since these loans are not sold to Wall Street, the portfolio lender can sometimes make certain exceptions that other lenders can't. These exceptions include less-than-perfect credit or lending on unusual properties. They have a minimum pay rate starting at 1.5%, and the note rate can fluctuate monthly. You must have reasonable credit (no late mortgage payments), and no more than an 80% LTV. Stated income is OK.
  QUICK LINKS

  FIXED RATE LOANS
  Adjustable Rates
  Option ARMs
  Subprime
  

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  SUPER JUMBO
  100% Financing
  Stated Income
  Interest Only
  

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  TODAY'S RATES
• Super Jumbo Option ARM
  Big loans without the huge payments. These loans are like the Traditional Portfolio Option ARM with loan amounts up to $5,000,000! It has a minimum pay rate at 2.5%, and the note rate can fluctuate monthly. This is a stated income loan -- up to $5 million! No tax returns needed. You must have excellent credit (680 FICO or above) to qualify for this program.