Explore the Mortgage101 Library
Check Local Mortgage Rates
Loan Program Choices
Use our calculator to find out your estimated monthly payment in advance: Enter the loan amount, interest rate, and length of mortgage.
Try our Mortgage Payment Calculator
A hybrid loan refers to a specific type of mortgage. With a hybrid loan, buyers have a fixed low rate on the loan for the first five to seven years of the mortgage term, which allows them to save money on their payments. After the first five to seven years of the mortgage has been paid off, the loan then moves to an adjustable rate.
This may cause some trouble for the buyers in the sense that the payment will change from month to month depending on the interest rate. An option for those who want to stay in the home without worrying about how high the interest rate will jump is to get a hybrid loan with an interest rate cap. This will set a maximum interest rate that can be charged in a monthly payment, therefore allowing buyers to budget the maximum amount their mortgage payment could be.
People choose these loans because the low fixed interest rate in the beginning is cheaper than many other mortgage options, and these days, not too many people stay in a home longer than five to seven years before they sell or refinance. For those who only plan to stay in the home a short period of time before moving to another, this is an excellent chance to save money.
- What Lenders Don't Reveal About Home Equity Loans
- How to Get Approved for an FHA Loan despite Bad Credit
- Alternatives to Getting a 2nd Mortgage
- Should You Refinance? Make Sure the Timing is Right
- Low Down Payment Loan Qualification
- Short Selling a Rental Property
- FHA Loans for a First-Time Home Buyer
- 3 Factors that Can Negatively Affect Your Mortgage Application
- 3 Common Short Sale Mistakes