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Is an FHA Hybrid arm whith a fixed rate for 5 years at 2.87% and can be converted to a fixed rate anytime after 6 months a good idea when I currently have an FHA 30 yr fixed at 5.25?

It would lower my monthly payment by almost $200 by Nervous from Las Vegas, Nevada. Jan 9th 2011 Reply


Eddie Stephen (EdtheLoanGuy)
#15 ranked lender in Colorado - 24 contributions

Certainly the savings and low rate would be a good idea. The question would be what rate would you be able to convert it to when you lock in the Fixed rate, and are there any costs associated with converting it to the fixed rate? If immediate savings is your goal, this sounds like a good plan, keep in mind you need to have an exit strategy because it's not a permanent solution.email me if you have any questionsEddie Stepheneddie@myhomeloanhelp.com

Jan 10th 2011
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Tammy Hileman (tamidyer2003)
#51 ranked lender in Arizona - 5 contributions

yes it will lower your payment. Great product if you plan on staying in your home

Jan 10th 2011
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Paul Martin (paul@mortgageloansct.com)
#9 ranked lender in Connecticut - 2 contributions

One of the nice things about the FHA Hybrid ARM is that the margin is very low - typically 2.25% which means -generally- if rates rise by 2% over the long term (30 year rates around 6.75%) based on today's T-Bill index the FHA Hybrid ARM interest rate would be 2.30 + 2.25 = 4.55%. Nice.Problem is that people hear "adjustable" and always think about the upside risk - which is understandable - but the way the FHA Hybrid Arm is constructed is to help to minimize that upside interest rate risk.I have had an ARM since 1987 and it's rate has fallen just as much if not more than it has risen. My current rate is 3.125%.

Jan 11th 2011
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