The best of both worlds

In addition to fixed rate mortgages and adjustable rate loans, homeowners today are in a unique position to combine the benefits of a fixed rate mortgage with the savings opportunities of an adjustable rate mortgage.  With a hybrid loan (also called a fixed-period ARM or hybrid ARM) borrowers get the best of both worlds.

A hybrid loan provides a fixed rate term, usually three, five, seven or ten years, with adjustable rates thereafter.  These loans are typically expressed as a 3/1, 5/1, 7/1 or a 10/1 ARM.  The first number represents the number of years the rates are fixed.  The second number indicates the adjustment interval (how often the interest rate will change).  For a 7/1 loan, the fixed period is seven years with annual interest rate adjustments thereafter.

The advantage of a hybrid loan is that it gives you a lower fixed rate mortgage than you’ll typically receive with a 30 year mortgage. This is often an attractive loan choice for borrowers who expect to be selling their home within the first 10 years of ownership.  Borrowers get the advantage of a lower fixed rate while living in the home. And if plans remain steady, the adjustable rate wouldn't’t be due until after a planned move.

Hybrid loans are also an attractive loan choice for borrowers who want an ARM, but feel the need for added interest rate protection during their first years in the home.

Utilizing an ARM in financing your home shouldn't be done lightly.  In fact, considering loan options, including the lower monthly payments of an ARM, is one of the major reasons clients value utilizing the Sam Croskell TEAM.  Sam has earned the coveted CMPS designation, a rigorous educational and testing competency regime involving cash flow, tax impacts, capital growth, retirement planning and debt reduction.

Whether you plan to move within 10 years or you’d like the added rate protection a hybrid loan affords, we’ll be glad to help you find the best loan program to meet your needs.  We look forward to helping you!