Hybrid Loans

30/5 Balloon with conversion option. 5-year fixed followed by a 25 year fixed.

This is a 30-year loan except that the interest is only fixed for the first 5 years. After 5 years, the entire principal is due. There is typically an option to convert to a 25-year fixed rate based on market pricing at the time the balloon becomes due. There might be a minimal processing fee (typically $250) to obtain the new loan. The conversion rate is normally the FNMA 60-day rate + 0.5%. The conversion option may also be conditional upon :

1. Satisfactory mortgage-payment history.
2. The borrowers must still be the owner-occupants.
3. Secondary financing may not be allowed.

This loan is also known as the 5/25, or 30-yr due in 5.

30/7 Balloon with conversion option

Same as above replace 5 yrs with 7 yrs, and 25 yrs with 23 yrs.

30/5/1 ARM. 5 yr fixed followed by a 1-year adjustable for 25 yrs.

This is a 30-year loan except that the interest is only fixed for the first 5 years After 5 years the loans becomes an adjustable. These loans typically do not have a balloon provision.

30/7/1 ARM. 7 yr fixed followed by a 1-year adjustable for 23 yrs.

30/10/1 ARM.10 yr fixed followed by a 1-year adjustable for 20 yrs.