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Hybrids May Be The Answer

Could this be the year to check out hybrid mortgages, which haven’t been popular lately? Maybe. You can count on interest rates going higher because the Federal Reserve intends to continue reducing its monthly purchases of mortgage bonds and Treasury securities, which will have the side effect of raising rates and the national economy finally appears to be picking up steam, based on the latest quarterly data. Higher growth rates in turn will increase demand for available credit and probably nudge rates higher.

So what does this mean for you if you’re thinking about buying a house or refinancing and you want to nail down the most favorable interest rate and terms? Should you shop primarily for a traditional home loan that guarantees you a specific rate for 15 to 30 years? Or should you check out what’s also on the shelf in the way of hybrids — loans that provide a guaranteed fixed rate for a pre-defined period of time, say five, seven or 10 years — then convert to a rate that can change annually?

The case for sticking with a traditional fixed-rate loan is straightforward. Though 30-year rates are more than a percentage point higher this month than they were a year earlier, they are still not far off multi-decade lows. On the other hand, loans that provide a guaranteed fixed rate for a pre-defined period of time, and then convert to a variable rate, are usually less expensive than traditional 30-year fixed loans.

Source: Ken Harney, The Nation’s Housing  

Want to check out current rates on hybrid adjustables?  

Just contact me and I will give you up-to-date quotes and we can discuss whether these alternatives may fit your needs.

Program

Rate

APR

Loan Amount

30 Year Fixed

4.250%

4.281

≤ $417,000

30 Year Fixed

4.375%

4.396

> $417,000

30 Year Jumbo

4.375%

4.384

> $625,500

15 Year Fixed

3.375%

3.429

≤ $417,000

15 Year Fixed

3.375%

3.411

>$417,000

FHA 30 Year Fixed

3.750%

5.267

≤ $417,000

FHA 30 Year Fixed

3.750%

5.259

> $417,000

VA 30 Year Fixed

3.875%

4.144

> $417,000

5/1 ARM

2.875%

2.852

≤ $417,000

5/1 ARM

3.250%

2.904

> $417,000

5/1 ARM Jumbo

2.875%

2.828

> $625,500

The Mortgage Insurance Payment Eliminator*
The cost of mortgage insurance is included in the 
incredibly low rates shown below.

Program

Rate

APR

Loan Amount

30 Year Fixed 85%

4.500%

4.532

≤ $417,000

30 Year Fixed 85%

4.625%

4.646

> $417,000

30 Year Fixed 90%

4.500%

4.532

≤ $417,000

30 Year Fixed 90%

4.625%

4.646

> $417,000

30 Year Fixed 95%

4.625%

4.657

≤ $417,000