# Option Adjustable Rate Mortgage (Option ARM) Agreement
**This Option Adjustable Rate Mortgage Agreement ("Agreement") is made this [Date] by and between:**
**Borrower(s):**
[Borrower Full Name]
[Borrower Address]
[City, State, Zip]
[Social Security Number]
**Lender:**
[Lender’s Name]
[Lender’s Address]
[City, State, Zip]
[Phone Number]
[Email Address]
## Recitals
WHEREAS, the Borrower desires to borrow funds from the Lender, and the Lender agrees to lend such funds under the terms as set forth in this Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained herein, the parties agree as follows:
## 1. Loan Amount
The Lender agrees to loan the Borrower the sum of [Loan Amount] Dollars ($[Loan Amount]) (the “Loan”).
## 2. Interest Rate
The interest rate for this Loan is adjustable and will be determined by the Lender based on a specified index plus a margin. The initial interest rate is [Initial Interest Rate]% per annum, which may adjust periodically according to the terms set forth herein.
## 3. Payment Options
The Borrower has the following payment options available each month:
1. **Minimum Payment:** The Borrower may choose to make a minimum payment which may be less than the interest charged.
2. **Interest-Only Payment:** The Borrower may choose to pay only interest on the Loan.
3. **Fully Amortizing Payment:** The Borrower may choose to make a payment that fully amortizes the Loan over the term.
## 4. Loan Term
The term of this Loan is [Number of Years] years commencing on the date of this Agreement.
## 5. Adjustments
The interest rate will adjust periodically on [Adjustment Frequency] based on the [Index Name]. Any adjustments will be communicated to the Borrower before the adjustments take effect.
## 6. Prepayment
The Borrower may prepay the Loan in full or in part at any time without penalty.
## 7. Default
If the Borrower fails to make any required payments or otherwise defaults under the terms of this Agreement, the Lender may declare the entire balance of the Loan immediately due and payable.
## 8. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the State of [State].
## 9. Entire Agreement
This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements, understandings, and negotiations, both written and oral.
## IN WITNESS WHEREOF,
the parties hereto have executed this Option Adjustable Rate Mortgage Agreement as of the day and year first above written.
**Borrower Signature:** _______________________
**Date:** ____________
**Lender Signature:** _________________________
**Date:** ____________
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**Note:** This template is for informational purposes only and should not be construed as legal advice. Consult with a qualified attorney for legal guidance specific to your situation.