hybrid mortgage

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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 ?
Morgan Mortgage Trust 2019-HYB1 (JPMMT 2019-HYB1) is a prime RMBS transaction comprising 703 hybrid adjustable-rate mortgages (ARMs) with an aggregate principal balance of $557.5 million as of the August 1, 2019 cut-off date.
Designed for multifamily acquisitions and refinancings, Freddie Mac's Small Balance Loan Product will offer both fixed-rate mortgages and hybrid adjustable-rate mortgages ranging from $1 million to $5 million.
We further document that non-amortizing mortgages, mortgages that combined short periods of fixed interest rates with adjustable rates thereafter (the so-called 2/28 and 3/27 hybrid adjustable-rate mortgages [ARMs]), and loans underwritten on the basis of incomplete documentation all defaulted at higher rates.
In our cover story this month, we examine how many loans going into portfolio are hybrid adjustable-rate mortgages (ARMs) and what's behind this growing trend.
Rates for five-year and one-year Treasury-indexed hybrid adjustable-rate mortgages also increased on a week-over-week basis, to 4.25 percent and 4.14 percent, respectively.
For those buyers, Gumbinger suggests hybrid adjustable-rate mortgages (ARMs), which feature a fixed interest rate usually for three, five, seven, or 10 years until they turn into traditional adjustable-rate mortgages.
The pool comprises 13.1% fixed-rate mortgages, which have the lowest default risk because of the stability of monthly payments, and 86.9% hybrid adjustable-rate mortgages with initial fixed periods of five years to ten years, allowing borrowers sufficient time to credit cure before rates reset.
Cordray's op-ed piece also said the agency will issue new disclosures for hybrid adjustable-rate mortgages. He explained that consumers would be notified "months ahead of their first interest-rate adjustment and will receive a Good Faith Estimate of their new monthly payment along with a list of alternatives they may pursue to head off the higher rate, including refinancing and renegotiation of loan terms."
The mortgage loans, seasoned approximately four months, are predominantly hybrid adjustable-rate mortgages (ARMs) with initial fixed rate periods of seven years (83.5%).
After four years of aggressive lobbying by MBA, the Federal Housing Administration (FHA) finally published the Eligibility of Adjustable Rate Mortgages interim final rule in March, changing the interest-rate cap structure for 5/1 hybrid adjustable-rate mortgages (ARMs).
Home purchasers are using five-year hybrid adjustable-rate mortgages (ARMs) with interest-only payment options to cope with rising rates, he reports.
Dal Porto expects to fund more hybrid adjustable-rate mortgages (ARMs) with interest-only payment options in 2003.