Payment option mortgages are all the rage in Southern California. With ridiculous purchase prices for homes up and down the coast, borrowers need a loan that can help them qualify for their high priced dream home. Along comes the "payment option ARM", a loan that gives the consumer several choices each month for paying their mortgage back. This popular loan allows homeowners to make a payment for less than the interest accrued, and the loss of interest is added to the principal of the loan later. One major concern of the option arm mortgage is the restrictions for future subordinate financing. Frequently when people buy a home they don't anticipate that they will need a second mortgage or home equity loan. The irony is that many of these borrowers are starting off with an adjustable rate second mortgage or line of credit.
