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Fixed Rate Option loans (FRO) let you take advantage of the best of both worlds. Offered by IndyMac, you can
use a this program to secure as a low ARM when the interest are working in your favor, and when this
changes, you can switch to a fixed rate mortgage after three to seven years for the low cost of $200. A mere
$200 can save you tens or hundreds of thousands of dollars over the life of your loan. You
are taking advantage of changes in the today's market, instead of letting the changes take advantage of you.
It may seem complex, but the mechanics of this type program are actually pretty straightforward. You start
with an ARM. Generally, this is what you want to do when the interest are going down. Every month, as rates
decline, you save money on your mortgage - thanks to the ARM. But, these declining trends do not last
forever, and this is where your FRO can help. You do not
have to worry about increasing rates, though a ARM normally would be cause for concern. You have a way out.
You can convert your ARM to a loan with a fixed rate of interest. You can't do it right away; you do have to
live with this for a few years. This does put you at risk, if the market spikes up, the cost of your home
could go up substantially. But, spikes are rare; trends tend to be gradual. If it does go up, your cost will
increase only slightly. When you hit your window
- anywhere from three to seven years, depending on the loan - you can convert your ARM to a fixed rate.
This is the beauty of this program. You have to wait a few years, so you do have a little bit of risk. But,
you can then steady your future payments, allowing you to take advantage of the lowest possible interest
rate before they start to go up again. The fixed rate offered by the FRO then becomes yours for the duration
of the mortgage. As a result, you get
the best of both worlds, putting extra money in your pocket for as long as you have to pay off your home.
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