Home owners across the country are keeping a close eye on mortgage rates. With high gas prices and increasing energy costs, the rising cost of home mortgages will put additional strain on already tight household budgets. That’s why it’s important that consumers understand their financing options and to effectively managing their money.
Hybrid adjustable rate mortgages are the hottest trend in mortgage right now. Referred to as ARMs, hybrid mortgages are popular when interest rates are predicted to rise in the future and for those looking for a shorter term investment. Traditionally, mortgages are fixed rate. Fixed rate mortgages are obviously those with a fixed rate of interest, usually for a long period of time, about 15 to 30 years.
Hybrid mortgages, on the other hand, are designed for short term investment and are not totally fixed. Hybrid mortgages span the gap between fixed rate, long term mortgages and adjustable rate mortgages. Hybrid mortgages have a fixed rate for a specified period of time then switch to an adjustable rate. As mortgage rates go up, consumers want to fix their rate to keep it low. After a few years, though, prices will have hopefully decreased and a variable rate will be superior.
The most popular hybrid mortgage is a 5/1 adjust rate mortgage. This means the mortgage has a five year fixed rate followed by a one year adjustable rate. For a better understanding, be sure to browse any and all mortgage lender comparisons for more information regarding hybrid mortgages and other mortgage options.