One of the first choices a homebuyer will need to make is whether you want a fixed-rate or an adjustable-rate mortgage loan. The bulk of loans will fit into one of these two categories, however, there is a third option that will allow you to “hybrid” the two.
An adjustable-rate mortgage, (ARM): The interest rate of the mortgage adjusts periodically based on market conditions. For example, your payment will go up if rates go up and go down if rates go down. Fixed-rate Mortgage: Unlike an adjustable-rate mortgage the interest rate is set at the time you take out the loan and will not change. Fixed-rate home loans can be 10 years, 15 years, 20 years or 30 years fixed. 30-year fixed is the most common because it allows your mortgage payment to be the lowest. Hybrid ARM: Features an initial fixed interest rate for a certain amount of time and then becomes an adjustable-rate for the remainder of the term. Standard terms are 3, 5, 7, or 10 yrs.
For many experienced borrowers the hybrid fixed-ARM loan is the preferred loan of choice, simply because your rate of interest will always be lower than the average daily/monthly rate of your peers. Having a clear understanding of the benefits of hybrid fixed-ARM loans is the best place to start in saving the most amount of money with your mortgage financing options.
As many of us know, we typically seek out a new mortgage loan every 3 to 5 years for one reason or another, market changes, financing or money needs, or just because of natural changes in life.
Call me to get full details of the many benefits of the fixed ARM hybrid loan programs available.