Option ARMs (flex ARMs)
Option ARMs (flex ARMs) are adjustable rate mortgages with a twist.
Each month you receive a statement with up to four payment options and select the amount to pay each month. If you choose the minimum payment you won't cover all the interest which will be added to your loan amount.
It means that even though you have made a payment, you could own more on your loan, not less, that when your loan began.
This is what you should avoid. If you have a fluctuating income and won't be tempted to pay the minimum each month — choose this type of mortgage.
Fixed rate mortgage
Adjustable rate mortgages (ARM)
Hybrid mortgages