Home owners are increasingly choosing mortgage refinancing with hybrid Adjustable Rate Mortgage loans. Hybrids have a number of advantages over regular Adjustable Rate Mortgages including less risk for the borrower. Here are several tips to help you decide if mortgage refinancing with a hybrid Adjustable Rate Mortgage is right for you.
The most common hybrid Adjustable Rate Mortgages are designated with 3/1, 5/1, and 7/1. This designation means your interest rate will be fixed for a certain number of years and the second number is the interval your lender adjust the interest rate. In the case of a 3/1 hybrid mortgage, the interest rate is fixed for 3 years, and the lender adjusts it every year after that.
Suppose you’re considering mortgage refinancing for $200,000. With a 3/1 hybrid Adjustable Rate Mortgage, you could cut your monthly payment from $1,599 to $1,240 per month for the first three years. This is especially helpful for homeowners that will be selling or refinancing at the end of the fixed rate period. Adjustable Rate Mortgages frequently come with an ultra-low introductory interest rate often called a teaser rate.
Before choosing mortgage refinancing with a hybrid Adjustable Rate Mortgage it is important to fully understand what you are getting into to avoid payment shock when the lender starts adjusting your interest rate. Adjustable Rate Mortgages come with caps to prevent excessive increases in the mortgage payment and interest rate. Make sure your Adjustable Rate Mortgage has both interest rate and payment caps and you choose mortgage refinancing with the most competitive caps.
You can learn more about your mortgage refinancing options with hybrid Adjustable Rate Mortgages including costly mistakes to avoid by registering for a free mortgage tutorial.
To get your FREE six-part Mortgage Refinancing Video Tutorial, visit RefiAdvisor.com using the link below.
Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. For a free copy of "Mortgage Refinancing - What You Need to Know," which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com.
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