Is an Option ARM Mortgage Good for Anyone?

The option ARM (adjustable-rate mortgage) is sometimes looked at as a mortgage that is not in the best interest of borrowers. However, there are some individuals that can benefit from this type of mortgage. Here are a few types of borrowers that an option ARM might be good for.

Irregular Income

Some people have irregular incomes. They might receive a big paycheck one month and a small paycheck the next. For example, many commissioned salespeople do not know how much money they will be able to make from one month to the next. In this case, having an option ARM can be beneficial. When they do not make much money, they can choose to make the minimum monthly payment. When they get a big paycheck, they can go with a larger mortgage payment to make up the difference.

Increasing Income

Individuals who expect to increase their income in the next few years can also benefit from an option ARM. With the option ARM, they will be able to make smaller payments while their income is low. After their income increases, allowing them to afford a higher monthly mortgage payment, the loan will be recalculated.