Option ARM
This type of mortgage provides the borrower with flexibility in how the loan can be repaid. Once your loan closes, you are given the options of making either a) interest only payments b) fully amortized payment, or c) minimum payments.
PRO: You have options of how you wish to pay. This is great for borrowers who receive large commission income or bonus income. You can make smaller payments monthly and then a large payment when the commission or bonus income is received.
CON: You run the risk of the amount of your mortgage increasing if you only make the minimum payment option.