I think I know the answer, but wanted to get some expert opinions.
More and more we have construction loans that require a longer than 1 year term (palatial homes take longer to build
) Is it even possible to service an interest only ARM (subsequent disclosures) where the rate changes with changes in the index? I'm thinking no - the rate changes and the next the payment inevitably changes as a result and there's no way to ensure the subsequent notice goes out within an adequate time period with every rate change.
But suppose we figure out a way to make that happen. What would the historical example in the ARM program reflect (we use option B, not the 15 year example)? The 30 day interest payment at the intital rate and at the maximum rate?
Maybe I'm just Monday brain-dead, but I can't see how this can work - especially the subsequent disclosures...I'm coming around on the initial ones.
Do any of you offer an interest only construction ARM? Because my lenders insist that all of our competitors do....