Hybrid Home Loan
Hybrid home loans are a combination of a fixed rate mortgage and an adjustable rate mortgage.
They start out as a fixed rate mortgage and then after a set amount of time switch to being
an adjustable rate mortgage. Hybrid loans are useful if you don't intend to keep your loan
for more than 5 to 10 years. Another similar loan is the 7/23. These loans are initially
fixed rate loans for the first 7 years and then have a one time adjustment, and stay
at the new adjusted rate for the remaining 23 years.
The more time before the interest rate adjusts to an adjustable rate loan the
higher the interest rate will be. However, the starting interest rate of a hybrid adjustable rate mortgage is usually lower than the interest rate of a traditional
30-year fixed rate mortgage. Hybrids will also have a higher adjustable interest rate
than a traditional adjustable rate loan since the interest rate stays locked in for
To consider a hybrid, you should see if you will be moving before the initial
interest rate expires. This way you can potentially save money versus a traditional
fixed rate mortgage. However, if you plan to stay in your home after the initial
interest rate period then you might face the risk of rising payments due to the
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