Home Loans – Combination Rate Mortgages (Fixed Period ARMS)

Should I choose a Combination Rate Mortgage (Fixed Period ARM)? Combination rate mortgages combine start with a fixed interest rate and then have adjustable interest rates thereafter. Lenders often refer to these loans as hybrid ARMs. Fixed periods vary, usually 1, 3, 5, 7 or 10 years. During the fixed period, the interest rate and monthly payment remains the same. After the fixed period, your interest rate and monthly payment are adjustable, usually every six or 12 months.

A combination rate mortgage may suit you if:

• You need stability today — You want predictability in your monthly payment during the fixed period of the loan to help gain control of your monthly cash flow by knowing your monthly mortgage payments will be the same during that period.

• You want a lower starting monthly payment that would allow you to make consistent, on-time mortgage payments that could help you to repair your credit.

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

If you have a lot of consumer debt — credit card balances, medical bills, high-rate automobile loans — these loans can be a good choice.

Fixed period ARMs can also be used to refinance a home and consolidate debt. Refinancing and cashing out home equity that may be available through your home's increased value, or by virtue of making principal payments on your home loan over time, is called a "debt consolidation refinance." With this type of loan you could pay off other bills, especially those high interest rate credit cards bills. Then, most or all your debt would be in the form of a home loan. You could make 1 payment each month instead of multiple payments, and interest payments on your home loan may be tax deductible (ask your tax advisor). Consolidating high interest debt into a lower home loan interest rate would lower your monthly payment bill payments.

You might also consider an adjustable rate or fixed rate mortgage.

Is a combination loan right for you?

If you are uncertain which home loan product is right for you, let a Countrywide Loan Consultant help you compare your options! We can offer home loans for nearly every situation and can help borrowers with a wide range of credit profiles, including people with less-than-perfect credit. Even if you've had a setback that has caused some credit problems, we're eager and well-equipped with a full spectrum of loan options to serve you. That's why we offer loans like our combination rate mortgage, which can help people get the loan they need that could help them to rebuild their credit or consolidate debt. Call 1-800-909-8217 today to find out how Countrywide Bank's Full Spectrum Lending Division can help you.