For many people an option arm really is the best choice. The Key is to explicate it right. Perhaps this lawsuit survey will help.

I have got a client a single ma with 2 children. She managed to salvage small down payment and decided to but a house. The problem is how much house could she afford. At the clip she bought her house she could only afford about $700 a Calendar Month PITI. We managed to get her into a $120,000 house with 10% Down. Her Mortgage payment on a 5 Year Option arm was only $440 a calendar month for the first 5 Old Age leaving her $260 a Calendar Month for Tax and Insurance. At the clip she bought her house 2 old age ago she was thrilled to get the loan.

I ran into her recently and asked her how things were going she said she was a small disappointed in her loan because she now actually owed more than on her house then when she got the loan a small over 2 old age ago, I said to her let's put up a one-half hr appointment where we can speak it over and see how we can work out the problem.

We got together a hebdomad later and discovered in 2 old age the amount she owed (her principal) increased by less then $2,000 yet her house appreciated in value over $15,000 based on recent comps in her area. An unfulfilled addition of over $13,000. I said to her what is better to be a tenant and pay your Landlords mortgage or be an proprietor and pay your ain mortgage. I further explained to her how each calendar calendar month she have We looked at some refinance options but she decided to maintain the loan she had because it did give her 4 payment options each month

minimum payment,
Interest only payment,
30 twelvemonth payment
15 twelvemonth payment.

A lesson I learned from this is even if I believe a client understands the loan at shutting it is always best to follow up every few months. I turned an disquieted client into a happy client and got a referral out of it, I am now following up with all my option arm customers.