Find out if Hybrid ARM is the right loan for you

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Conventional “Adjustable Rate” Mortgage

Hybrid ARM

Conventional “Adjustable Rate” Mortgage

A Hybrid ARM is a loan that is fixed for an initial period of time, and then converts to an adjustable rate mortgage.

One of the most common is a 5/1 Hybrid adjustable rate mortgage which is fixed for the first 5 years and then converts to 1-year adjustable rate mortgage for the remaining 25 years. Also Available are 7/1 and 10/1 Hybrid ARM’s.

Home Renovation projects can be financed and provide a great return on your investment. Not only you could be adding equity to your home but you will have many options to remodel your home. Whether it is hybrid arm loan, home equity loan, cash outs or personal loans. Check the appropriate home remodel loans for your situation and let Kukun match you with the right loan and right lender.

Pros

  • Initial interest rate and payments are typically lower than 30-year fixed rate mortgage thus making payments initially more affordable.
  • Initial fixed rate period longer than typical adjustable rate mortgage.
  • If borrower expects to keep loan for short-term, or if the general interest rate market is expected to decline in the future, a Hybrid ARM may be less expensive than a fixed rate mortgage.
  • Initial interest rate adjustment after fixed period, annual rate adjustments and maximum interest rate are capped.
  • Loan pays off in full by the end of the term – no balloon payment at end.
  • No pre-pay penalties or fees.
  • Hybrid adjustable-rate mortgages are readily available from many sources in the market (i.e. Banks, Mortgage Companies, Savings & Loans, Credit Unions).

Cons

  • Converts to an adjustable rate mortgage after initial fixed period – monthly payment will likely increase above initial fixed period payment.
  • Interest rate and payments will change periodically after initial fixed period, and could rise substantially May exceed payment level of a fixed rate mortgage.
  • Require good borrower qualifications – good credit, steady income and larger down payment/ more equity.
  • Requires full principal and interest payment at current loan interest rate.
  • Requires larger equity percentage if borrower want to access equity via a Cash-out Refinance -limited to 80% of the value of the property less existing liens.
  • Requires full loan application, borrower documentation and appraisal, and may take 30-45 days to obtain funds.
  • Up front closing cost and fees are higher than similar government loans.
  • Can not be used on properties currently under construction.

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Are you ready to take on that home remodelling project? Apply for a home improvement loan here.
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Interest Rate

Adjustable – will
adjust periodically

Fixed–will not change

Fixed – will not change


Monthly Payments

Payment changes when interest
rates changeMonthly interest-only
payments during draw

Fixed for life of loan Full
principal and interest
payment monthly

Fixed for life of loan Full
principal and interest payment
monthly


Term (length
of loan)

Available terms between 10
years and 30 years

Available terms between
2 years and 7 years

Available terms between 10
years and 30 years


Min & Max
Loan Amount

$5,000 to $500,000

$2,500 to $100,000

$5,000 to $500,000


Borrower
Qualifications

Requires good credit, good
income and low debt-to-income
ratios

Requires excellent
credit,good income and
low debt-to-income
ratios

Requires good credit, good
income, and low debt-to-income
ratios


Closing Costs
and Fees

Lower cost and fees than
conventional and FHA
loans Depending on LTV, may only
require limited appraisal
May have balloon payments and
annual maintenance fees

No fees or very low fees
No appraisal needed May
have early termination
fee in first 12 months

Lower cost and fees than
conventional and FHA loans
Depending on LTV, may
only require limited appraisal
No prepayment fees or balloon
payments


Application,
Timeframe
and Availability

Limited application 30 days or less
Available through most banks
and credit unions

Short online application
3–5 days Limited
sources

Limited application 30
days or less Available
through most banks and credit unions

Space to add an invitation to apply an aloan


Terms, conditions, and state restrictions apply. See SoFi.com/eligibility for details. SoFi loans are originated by SoFi Lending Corp., Licensed by the Departament of Business Oversight under the California Financing Law License. *https://www.sofi.com/legal#welcome-bonus