If you notice any advertisements with 1% start rates, be sure to ask a lot of questions and find out all the details. The 1% rate is usually what the payment is based on for the first year, not the actual interest rate.

These loans are negative amortization loans, often advertised as Pay Option ARMs.

Pay Option ARM loans usually start at very low rates, such as 1% interest rates and can be a great option for consumers who need to free up their monthly cash flow, consumers who are self-employed and for consumers who are commissioned. These types of loans are not for everyone due to the nature of these types of loans. Negative amortization can occur with these loans and these loans can be classified as somewhat high risk if they are used improperly. However, when used correctly as a great financial tool, Pay Option ARMS can be a great asset.

These low interest rate programs are great for investors who are looking to purchase or refinance investment properties since they allow the ability to choose several payment options that can maximize cashflow. If you have period where your trying to find a renter, you can choose the minimum payment option until one is found.

1% mortgage rate home loans are available in fixed rate and adjustable rate mortgage varieties.