Subprime Hybrid Mortgages

Subprime Hybrid Mortgages
Subprime hybrid mortgages offer temporarily low rates for borrowers while they work to​ rebuild their credit .​
With a​ sub-prime hybrid mortgage,​ you​ don’t have to​ pay PMI,​ saving hundreds a​ year .​
After two or​ three years of​ on​ time payments,​ you​ can then refinance for conventional mortgage rates.
Hybrid Mortgage Basics
Since so many people refinance their home loans after they have reestablished their credit,​ lenders created a​ mortgage to​ offer maximum flexibility for borrowers .​
Hybrid mortgages are typically 1.5% lower than a​ conventional loan for the​ first two or​ three years,​ depending on​ your mortgage terms .​
After that,​ the​ rated becomes adjustable,​ rising and falling based on​ indexes.
Lenders usually require a​ prepayment fee if​ the​ mortgage is​ paid off before two or​ three years .​
Since most borrowers use this period to​ establish good credit,​ the​ fee isn’t a​ problem for most .​
You may also be able to​ waive the​ fee by paying a​ point upon the​ loan’s settlement.
A hybrid mortgage also allows you​ to​ borrow more than with a​ fixed rate mortgage since your monthly payments are lower .​
You may also decide to​ increase your down payment to​ lower your rate or​ increase the​ amount you​ qualify to​ borrow.
Hybrid Mortgage Lenders
Hybrid mortgages are offered by conventional and sub-prime lenders .​
Rates,​ fees,​ and terms will vary with each lender .​
In order to​ find the​ best financing package,​ you​ should request quotes from several lenders before making a​ decision.
Typically online financing companies waive or​ reduce fees,​ so they are well worth checking out .​
You can also request quotes from traditional companies through their websites .​
Online mortgage brokers also make comparison shopping easy by offering several side by side quotes.
Refinancing Options
After you​ have had your hybrid for at​ least two years,​ you​ should begin shopping to​ refinance your mortgage .​
If you​ are planning to​ move within seven years,​ an​ adjustable rate mortgage may offer you​ the​ lowest rate .​
If you​ plan to​ stay put,​ a​ fixed rate mortgage can guarantee you​ a​ low rate over the​ course of​ your loan.
As with a​ sub-prime loan,​ compare lenders and finance packages to​ find the​ best deal.

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