BusinessWeek recently ran an interesting article on Option ARM mortgages (also known as pick-a-payment, negative amortization mortgages, NegAms, deferred interest mortgages, and various other aliases).  There are variations on the theme, but these loans all offer flexibility, ultra-low initial payments, and lots of risk to go along with it.  Each month the borrower can select from a variety of payment options, but the lowest payment amounts are not enough to cover the interest on the loan – meaning – the outstanding principal actually goes up. 

Now with rates rising and property prices flattening in many parts of the country many homeowners are waking up to the fact that perhaps that deal that  was too good to be true wasn’t so good after all. 

Stay tuned – soon EquityScout will be posting an article to the features page that gives a rundown of all of the popular mortgage options out there, with the pros and cons of each.