Hybrid Adjustable Rate Mortgages offer a lower, fixed interest rate for an introductory period. This period often lasts five years and if you need a short term solution mortgage solution you could save thousands of dollars with a Hybrid loan. Here are several tips to help you decide if mortgage refinancing with a Hybrid Adjustable Rate Mortgage is right for you.
Hybrids offer homeowners the benefits of Adjustable Rate Mortgages without the risk of payment shock. If you only plan on keeping your home for a short period of time, say five years for example, it doesn't make sense to refinance with a 30 year mortgage. Because 30 year mortgages are front loaded with interest you will pay a large portion during the first five years unnecessarily; this is where a hybrid could help you.
The introductory period of a Hybrid Adjustable Rate Mortgage lasts long enough that you would benefit from the lower interest rate before the lender starts adjusting the loan. Just make sure your mortgage does not include a prepayment penalty when you are ready to sell or refinance. If you have good credit you should have no trouble negotiating to have any prepayment penalty removed.
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Because you will only keep the mortgage for the duration of the introductory period, there are no risks that normally accompany Adjustable Rate Mortgages. By carefully avoiding Yield Spread Premium you will qualify for a significantly lower mortgage rate and save yourself thousands of dollars. You can learn more about avoiding Yield Spread Premium when refinancing your mortgage with a free mortgage tutorial.
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