Secure Option Adjustable Rate Mortgage Definition

A secure option adjustable rate mortgage is a type of payment-option ARM with a fixed interest rate period. The secure option ARM offers the borrower a flexible monthly payment option with a minimum payment amount resulting in negative loan amortization if exercised.

The secure option ARM varies from the payment option ARM primarily because of the fixed interest rate period component. The secure option ARM gives some protection and stability to the buyer against rapidly fluctuating interest rates. However, like a payment option ARM, a secure option ARM is likely to surprise most borrowers with a rapidly escalating minimum monthly payment amount.