Hybrid Option Arm Mortgages

Hybrid Option Arm Mortgages



Hybrid Option Arm Mortgages
The reality of​ today’s market is​ that interest rates are higher than rates from the​ past few years .​
What this means for first time homebuyers,​ real estate investors,​ and property owners with adjustable rate mortgages is​ that monthly payments for the​ traditional 30 year mortgage are becoming more and more of​ a​ financial burden.
Fortunately,​ for current and prospective homeowners who have good payment histories over the​ last two years and credit scores above 620,​ an​ emerging product is​ making monthly payments for mortgages both affordable and safe.
Hybrid Arms
Similar to​ Option-Arm mortgages,​ Hybrid Arm mortgages have 4 different options for monthly payments .​
These options are:
1.Minimum Payment - minimum payment—can lead to​ negative amortization.
2.Interest Only Payment - payment on​ only the​ interest of​ the​ mortgage
3.15 year Amortized Payment - payment towards the​ principal and interest based on​ a​ 15 year term
4.30 – 40 year Amortized Payment - payment towards the​ principal and interest based on​ a​ 30 or​ 40 year term
The primary difference between an​ Option-Arm mortgage and a​ Hybrid Arm mortgage is​ the​ length of​ time the​ minimum payments and interest rates in​ a​ Hybrid Arm are fixed.
Option-Arm mortgages typically have fixed interest rates of​ 1 to​ 3 months .​
In contrast,​ Hybrid Arms have fixed interest rates between 1 and 7 years.
What this means for homeowners is​ that the​ benefits of​ Option-Arm mortgages are now combined with the​ security of​ longer termed mortgages.
For example,​ a​ homeowner with a​ 200,​000 5-year adjustable mortgage pays $1467.00 before her taxes and insurance .​
With a​ 5 year Hybrid Arm,​ the​ homeowner would pay $800 a​ month on​ the​ same mortgage .​
The savings on​ the​ minimum payment would be comparable to​ the​ savings of​ an​ Option-Arm mortgage.
However,​ for an​ Option-Arm mortgage,​ the​ minimum payment would increase after 1 to​ 3 months,​ leading to​ minimum payments above $800 .​
With a​ Hybrid Arm,​ the​ minimum payment would remain at​ $800 for the​ 5 year term .​
For the​ homeowner,​ this means a​ more predictable monthly payment and a​ reduced risk for negative amortization.
Hybrid Arms (also known as​ Hybrid Option Arms and Fixed Option Arms) typically save homeowners about 55% of​ their typical monthly payments .​
They are powerful tools to​ save money and ensure financial freedom .​
To see if​ you​ qualify for a​ Hybrid Arm,​ contact a​ mortgage professional today.




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