Warning

Info

Warning

Info

Warning

Info

LSDefine

Simple English definitions for legal terms

Option ARM

Read a random definition: dog

A quick definition of Option ARM:

An option ARM is a type of mortgage where the borrower can choose how much they want to pay each month. They can pay the full amount, only the interest, or a minimum amount. If they pay the minimum amount, the amount they owe on the mortgage actually goes up instead of down. This type of loan was popular before the 2007-08 financial crisis.

A more thorough explanation:

An option ARM, or adjustable-rate mortgage, is a type of mortgage that gives the borrower different payment options. These options include:

  • A payment that covers both the interest and principal amounts, which will reduce the amount owed on the mortgage. This payment can be made over a 15-year or 30-year term.
  • A payment that covers only the interest (interest-only), which will not reduce the principal amount.
  • A minimum or limited payment that does not cover the interest-only amount. The interest that is not paid is added to the loan's principal balance or total amount on the mortgage.

When the borrower makes the minimum payment, they incur negative amortization, which means that the principal balance of the loan increases. Option ARMs were more popular before the subprime mortgage crisis of 2007-08.

For example, if a borrower has an option ARM and chooses to make the minimum payment, they will not be paying the full amount of interest owed on the loan. This means that the interest that is not paid will be added to the principal balance of the loan, causing it to increase over time.

option | Option Contract

Warning

Info

General

General chat about the legal profession.
main_chatroom
👍 Chat vibe: 0 👎
Help us make LSD better!
Tell us what's important to you
:o
Mostlylegal
12:56
did i fool you?!
noreaster
12:57
husband coming to live with me this summer
noreaster
12:57
woohoo
first power bottom president... besties we had JFK
noreaster
12:58
^
HOW COULD I FORGET RIP JFK YOU WOULD'VE LOVED $2 DRINK NIGHT IN THE GAY CLUBS
12:59
Anyone here going to Catholic or Drexel or NYLS ??
12-78-90live
13:00
Does anyone have confirmation on UConn’s class being full or not?
Mostlylegal
13:09
yeah its full, full of goobers!
they're arguing on the lawschooladmissions reddit rn about not applying to law school if you score below 150
guys i'll only say this one: do NOT apply to law school if you are only 150 rats in a trench coat pretending to be a person. everyone knows 150+ rats are needed to pass as a human being.
13:12
haha good one
i'm so glad we're finally talking about this here. the meme'ing is so good lmfao
13:13
bold of you to assume 150 rats < 1 human (infected with brain rot)
ClassyPleasantHeron
13:13
They've been arguing and memeing about that on Reddit for a few days now. All the poor sharks have waterski marks on their backs from all the jumping.
13:14
echo chamber > affirmation of beliefs > dopamine hit > mental gymnastics > think funny > 'Just trolling' > repeat. Sad state of reddit
Mostlylegal
13:14
classic nondenominational service
LMAOOOO it's so dumb man like i wish the biggest issue in my life was caring about the lsat score of others
13:16
lsat is the totem pole of law school. I for one will get a tattoo of my score to assert dominance both to peers and any teacher whom comes into contact with me
that's true honestly i saw how those rats in nosferatu can cause some damage in packs of like 50
13:17
opening line day 1 of 1L: 'So what did YOU get on the LSAT" if lower than me > wow u sugg. if higher than me > ur a liar!
Mostlylegal
13:17
who would win a >150 lsat or a law school
who will win: 50 rats or michigan admissions office
Mostlylegal
13:17
wait you guys are paying tuition???
13:18
What if 50 rats got into NDLS & NYU, ate all the apps, and both schools do not want to tell the world so they are just stalling hopeing every1 just forgets/goes somewhere else?? #RatGate
i heard barron trump ate the nyu apps that's why he's so tall
Mostlylegal
13:20
when I stand on my money im 5'11 (im 5'103/4)
13:26
Haha "Anytime I feel short, I stand on my wallet," mostly knows coins are far thicker than bills, smart man
FalseClearFlounder
13:28
Are Thursdays and Fridays more active for decisions?
LSD+ is ad-free, with DMs, discounts, case briefs & more.