These loans are still great – for the right borrower.  Educate yourself first on the power of the option. 

This is such a unique time for our country.  On one hand the “market bosses” say that the economy is strong.  On the other hand, more and more people are having trouble making ends meet.  We hear that real estate values are decreasing, but in some communities, values are rising dramatically.  How do we know who or what to believe?

One thing is certain, more and more people are amassing credit card debt and owe more on their bills at the end of each month.  Is there a solution to the madness?

One solution is for people to stop spending.  Do not spend more than you make – whether it is on your home or groceries or your kids’ diapers.  This solution is not very likely for most of us.  Expenses come up that cannot be avoided.  Our dream house is slightly more than we should pay, but still in the realm of what we can realistically afford.  While you may try to not increase your debt, it sometimes feels as if this is a losing proposition – like when you need an extra loan of groceries or an extra tank of gasoline!

Another solution to the madness is to manage your debt in a way that allows you to only pay what you can afford in a given month.  If you have a month where you make more money than others, or have fewer bills than others, you can afford to pay more to reduce your debt.  But, if you have a month where there are more surprises and not enough money, you wish you could choose how much to pay on your debt.

The Pay Option ARM mortgage is perfect for this type of situation.  This type of loan allows the borrower to literally select their monthly mortgage payment.  The payment for each month is chosen by the borrower based on that month’s available cash.

In plain English – If your full payment is $1300 per month, but this month you can only afford $1000, then you send in the lower option.  There is no penalty or default when you choose a lower option provided by the loan.  The only catch is that you are not paying your debt off as quickly as you would if you had sent more money.

Anyone with erratic monthly cash flow, because of commissions or surprise bills, could be a candidate for this type of mortgage.  But wait – hasn’t there been a lot of bad press about these programs?  Well, some people have chosen this program, with the ideal in mind that they will never make their full payment.  That is a bad strategy.  The great thing about this type of loan is that a lower payment option is there for you IN CASE you need it.  Yes, there can be an end to the madness!

These loans are still great – for the right borrower.  Educate yourself first on the power of the option.  A good loan consultant will help you figure out if you would make a good candidate for this type of loan.