Hybrid ARM's offer the consumer an interest rate that is fixed for an initial period of time then readjusts over the remainder of the life of the loan. These loans are a mix, or a hybrid, of a fixed-rate period and an adjustable-rate period. The interest rate is fixed for the first few years of the loan. After the fixed interest rate expires, the interest rate starts to adjust based on an index plus a margin.
Hybrid ARM's may be set with fixed-rate intervals of 3, 5, 7 or 10 years with the adjustable rate triggered on the reset date. After the reset date has been reached, the interest rate on the mortgage is typically assessed and recalculated on an annual basis. For example, a 7/1 ARM has a fixed rate for the first seven years, then converts to a 1 year adjustable after the reset date. There are also caps on the interest rate adjustments. Typically the initial adjustment cap is 2% above the start rate, unless the initial term is 5 years or longer, then the initial caps can be as high as 6%. The periodic or yearly caps are typically 2% above (or below) the existing rate and the lifetime cap is 5% or 6% above the initial fixed rate, depending on the term of the loan.
Normally hybrid ARMs offer an interest rate that is substantially lower than that of a 15 or 30 year fixed rate mortgage. This provides the borrower economical payments and better monthly cash flow. Although most people opt for 30 year mortgages, very few actually stay in the property or the mortgage for that long. People move, families grow, life happens and for lots of other reasons, the lifespan of a mortgage tends to be far less than 30 years. A hybrid ARM is ideal for borrowers who plan to sell their homes within 7 to 10 years. Contemporary homeowners often feel that it makes little sense to pay for a fixed rate for 30 years when most will be out of their homes and loans long before then. Hybrid ARMs provide a combination of safety and savings that many homeowners find too attractive to pass up.
Before you automatically opt for a 30 year fixed rate mortgage, take a moment and consider how long you intend to be in the property and if it's 10 years or less, you should take a long, hard look at a hybrid ARM!
With hundreds of mortgage programs available, let us show you how we can save you $$$$ on your next mortgage!
Company NMLS: 2366709
www.nmlsconsumeraccess.org
3001 Polar Lane, #502,
Austin, TX 78613
Phone: 512-299-4965
epaulson@gfmortgages.com
NMLS: 380212
Powered By LenderHomePage.com
Good Faith Mortgage LLC strives to ensure that its services are accessible to people with disabilities. Good Faith Mortgage LLC has invested a significant amount of resources to help ensure that its website is made easier to use and more accessible for people with disabilities, with the strong belief that every person has the right to live with dignity, equality, comfort and independence.
Good Faith Mortgage LLC makes available the UserWay Website Accessibility Widget that is powered by a dedicated accessibility server. The software allows txmtgloans.com to improve its compliance with the Web Content Accessibility Guidelines (WCAG 2.1).
Good Faith Mortgage LLC accessibility menu can be enabled by clicking the accessibility menu icon that appears on the corner on the page. After triggering the accessibility menu, please wait a moment for the accessibility menu to load in its entirety.
Good Faith Mortgage LLC continues its efforts to constantly improve the accessibility of its site and services in the belief that it is our collective moral obligation to allow seamless, accessible and unhindered use also for those of us with disabilities.
Despite our efforts to make all pages and content on Good Faith Mortgage LLC website fully accessible, some content may not have yet been fully adapted to the strictest accessibility standards. This may be a result of not having found or identified the most appropriate technological solution.
If you are experiencing difficulty with any content on Good Faith Mortgage LLC website or require assistance with any part of our site, please contact us during normal business hours as detailed below and we will be happy to assist.
If you wish to report an accessibility issue, have any questions or need assistance, please contact us by sending an email to: epaustinmtgs@gmail.com