hybrid mortgage

Hybrid Mortgage

An adjustable-rate mortgage in which the interest rate is locked for a rather long period of time. That is, the interest rate is locked for a certain period, often seven years, at which point it may move either upward or downward. Many hybrid mortgages have interest rate caps to offer further protection to the mortgage holder. The initial interest rate on a hybrid mortgage is often lower than market rates, but it carries the risk that after a certain number of years the interest rate will rise to a point resulting in payments that the mortgage holder will not be able to afford.

Hybrid mortgage.

Sometimes called an intermediate ARM, a fixed-period ARM, or a multiyear mortgage, a hybrid mortgage combines aspects of fixed-rate and adjustable-rate mortgages.

The initial rate is fixed for a specific period -- usually three, five, seven, or ten years -- and then is adjusted to market rates. The adjustment may be a one-time change, or more typically, a change that occurs regularly over the balance of the loan term, usually once a year.

In many cases, the interest rate changes on a hybrid mortgage are capped, which can help protect you if market rates rise sharply.

One advantage of the hybrid mortgage is that the interest rate for the fixed-rate portion is usually lower than with a 30-year fixed-rate mortgage. The lower rate also means it's easier to qualify for a mortgage, since the monthly payment will be lower.

And if you move or refinance before the interest rate is adjusted -- the typical mortgage lasts only seven years -- you don't have to worry about rates going up.

However, some hybrid mortgages carry prepayment penalties if you refinance or pay off the loan early. While prepayment penalties are illegal in many states, they are legal in others.

hybrid mortgage

A mortgage that combines the benefits of an adjustable-rate mortgage and a fixed-rate mortgage,such as adjustable rates in the early years and then an automatic conversion to fixed rates after a stated period of time.For example,the 5/25 (adjustable for 5 years and fixed for 25) and the 7/23.

References in periodicals archive ?
Or, you can opt for a hybrid mortgage -- which offers lower rates in the beginning, then goes up in a few years.
A mortgage broker who has migrated into the hybrid mortgage banking business "is still an entrepreneur and is still a small business, in many cases, and it's still brokering some of its business," he adds.
ACR801) Hybrid Mortgage REITs Balance Risk/Returns - Douglas Harter - Credit Suisse Group.
There is also a hybrid mortgage option, which allows you to go for a tracker mortgage and then switch penalty-free to one of the lenders' fixed rate deals later.
By design, a hybrid mortgage contract offers a fixed mortgage rate for a couple of years; after that, the rate is scheduled to reset once or twice a year to the current market rate plus a margin that is prespecified in the contract.
fixed-rate mortgage [FRM] or hybrid mortgage, if homeowner-occupied, presence of prepayment penalty clause), and macroeconomic conditions (e.
3 million subprime hybrid mortgage loans are slated to reset in 2008 and another 422,000 loans in 2009, Bair said.
If you're buying a starter home, for example, and your family is growing, it's likely that you're not going to live there for very long, so you're a perfect candidate for a hybrid mortgage.
The hybrid mortgage finance system features risk sharing.
Choosing a three-or a five-year hybrid mortgage (the most popular types) could shave 0.
We believe this demonstrates the strength of our investment team and highlights the benefits of the hybrid mortgage REIT model.
When the yield curve is inverted, we believe that as the fixed rate period of a hybrid mortgage ends and the rate becomes adjustable, the homeowner is likely to prepay and refinance rather than pay the higher fully-indexed rate.

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