A hybrid ARM is a loan that is fixed for a certain period of time, say, 5, 7 or 10 years. The rate is lower than a fixed rate but there is more stability than an ARM that adjusts every year. In other words it’s a cross between an ARM and a fixed rate. The borrower enjoys a fixed rate for the initial period of 5, 7 or 10 years. Often times, borrowers don’t anticipate staying in a property more than 5-7 years. So, why not take advantage of the monthly savings that are guaranteed for the initial period. There is no reason to pay the “insurance” of a 30 year fixed rate when it is reasonably certain you won’t have that loan for more than 6 or 7 years.
The difference in rate may be as much as 1% or more for a 5/1 ARM. The longer the initial term the higher the rate. But in all cases, hybrid ARMs come with lower rates than fixed rates. Give us a call and we’ll discuss your options.
CPC Mortgage was founded in 1986 by Ed Cree and John Patterson. We are a full service mortgage broker offering competitive rates and programs on conventional conforming and jumbo loans, FHA, VA and reverse mortgages. Over the years we’ve arranged financing on over 6,000 loans totaling just under $2 billion. The backbone of our business for over 28 years has been to advise our clients as if it was our own money. We have never spent money on mass market advertising, relying instead on referrals from real estate agents and former clients. If you treat people right, they will come back and they will tell their friends. We’re proud of our track record and will continue to stress customer service to all of our clients.
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