| hybrid and a traditional ARM THE dominant loan product in today's marketplace. They are often packaged as the 5/1 ARM or the 2/28 ARM (most popular products). The loan is adjustable define mortgage rate "Hybrid" because a true ARM adjusts for the same periods for the life of the loan, ie. a 6 adjustable define mortgage rate ARM is fixed for the first six months and adjusts every six months afterwards. The 2/28 "Hybrid ARM" is a 6 month ARM that the borrower has purchased a "Rate Lock" or introductory rate for the first 2 years (this is also done in 3,5,7 year fixed periods), and then the loan becomes a 6 month ARM thereafter, rather than a loan that does only adjust every 2 years. The benefits This loan product has actually adjustable define mortgage rate the costs of borrowing in the early years of loans, but certainly is a source of continuing refinance business to the Mortgage industry. adjustable define mortgage rate let borrowers take advantage of special pricing, by saving money on payments when the borrower's a) salary is rising such as for young adjustable define mortgage rate or b) when the borrower knows they are going to move up quickly from one home to another. The risks If a borrower is inconsistent in their on time payment history, afflicted by tragedy which causes a credit problem, or keeps insufficient funds in reserve (the payment savings from the lower rate for example), as referenced above, the rates in Hybrid ARMs will certainly rise, and with insufficient credit and income, the borrower may be forced to trade equity for time, adjustable define mortgage rate in some |
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