Combination Rate Mortgages

Combination rate mortgages combine fixed interest rates and adjustable interest rates. Lenders often refer to these loans as hybrid loans. For the first several years, the interest rate is fixed. It remains the same and so does your monthly payment. During the remaining years of the loan, your interest rate becomes adjustable and can vary.

During the first several years, combination rate loans typically have lower interest rates than fixed rate loans. Monthly payments are lower and you may be approved to borrow higher amounts.

You can also use combination rate loans to refinance a home and consolidate debt. Using the cash that may be available, you can pay off your bills. Then, all your debt is in the form of a home loan. You make one payment each month instead of a dozen. And your total monthly payment is lowered.

Reasons to Consider a Combination Rate Mortgage:

1. If you want the stability of a fixed principal/interest payment in the short term

1. To help repair your credit by demonstrating your ability to make regular payments, then refinance for a lower interest rate

1. If you have a lot of consumer debt (these loans typically allow more)

1. When you want to borrow more and get a lower monthly payment than a standard fixed rate loan