What is an option arm mortgage and why would I want to do one? I am in the process of locking in at a 30yr fixed rate of 5.375 0 pts (140,000) and my refinance company is offering this option arm as a second choice.

C. S.
Menomonee Falls
Wisconsin

Answer:

It would depend on your situation whether you would want to do an option-arm or not. If you do not fully understand it, I would not pursue it until you do. Most option-arms are based on the COFI (Cost of Funds Index). I prefer the LIBOR index myself because your margins are better. If you feel that interest rates will maintain low levels for some time as we do, you may want to explore further. You can end up saving a substantial amount of money.

Sincerely,

David C. Green
Senior Mortgage Analyst
Access National Mortgage
1-800-335-3670
www.accessnationaldirect.com