Hybrid ARMs in Arizona and Colorado

For years, homeowners have been split over what kinds of home loans in Arizona and Colorado are right for them: adjustable-rate loans or fixed-rate loans. There is another option available to borrowers using Castle Rock Mortgage, though, one that combines the best of both worlds.

A hybrid adjustable-rate mortgage in Arizona and Colorado offers both stability and flexibility, enabling homeowners to pay off their loan more quickly and, often, much more affordably. 

How Do Hybrid ARM Loans Work?

Hybrid ARMs in Arizona, also called fixed-period ARMs, combine features of both fixed-rate and adjustable-rate mortgages. Like a fixed-rate mortgage, a hybrid loan starts out with an interest rate that is “fixed” for a period of years (usually 3, 5, 7, or 10). This means that the interest rate remains the same throughout that time, providing a sense of reliability that makes it easy for homeowners to budget their finances.

After the fixed-rate period, a hybrid loan converts to an adjustable-rate mortgage, or ARM, for a set number of years. An example of this would be a 30-year hybrid loan that starts with a fixed rate for the first seven years, then transfers to an adjustable rate for the remaining 23 years.

Why Should You Apply for a Hybrid ARM Loan?

The beauty of hybrid ARMs in Arizona is that the initial interest rate for the fixed period of the loan is lower (sometimes significantly lower) than the interest rate would be on a fixed-rate mortgage, where the interest rate remains the same for the entirety of its lifespan. 

This means that homeowners can enjoy more affordable payments with less interest while also having a period of stability to help ease them into the mortgage repayment process. A typical one-year, non-hybrid adjustable-rate mortgage, on the other hand, changes to a new interest rate every year, starting 12 months after the loan was first taken out. While the starting rate on a traditional adjustable-rate mortgage is considerably lower than on a traditional fixed-rate mortgage, it comes with the risk of future price hikes.

Homeowners can get a hybrid adjustable-rate mortgage in Arizona and Colorado with a plan to refinance when the initial term expires. These types of loans are best for individuals who do not intend to live long in their current homes. By getting a lower interest rate and lower monthly payments than with a 30- or 15-year loan, homeowners can break even more quickly on other costs associated with mortgage refinance in Arizona and Colorado, such as title insurance and appraisal fees. Since the monthly payments will be lower, borrowers can make extra payments and pay off the loan early, saving themselves thousands during the years they have the loan.

Discover the Benefit of Hybrid ARMs in Arizona and Colorado Today

Choosing the right mortgage for your needs and budget can be a tricky process if you don’t have an experienced, knowledgeable lender by your side. Whether you’re interested in a hybrid loan, a traditional fixed-rate loan, or a traditional adjustable-rate loan, Castle Rock Mortgage is here to make that process easier, so you can get started on your journey towards homeownership quickly and efficiently.

Let’s work together so you can achieve your homeowner goals. Contact Castle Rock Mortgage today.