Hybrid Loans

30/5 Balloon with conversion option. 5 yr. fixed followed by a 25 yr. 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 occupant. 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 yr. with 7 yr., and 25 yr. with 23 yr.30/5/1 ARM. 5 yr. fixed followed by a 1 yr. adjustable for 25 yr. 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 yr. adjustable for 23 yr. 30/10/1 ARM.10 yr. fixed followed by a 1 yr. adjustable for 20 yr. VA Loans: The U.S. Department of Veterans Affairs guaranties mortgage loans for veterans and service persons. The guaranty allows veterans to obtain home loans with favorable loan terms, usually without a down payment. VA loans are available.

The U.S. Department of Veterans Affairs does not make loans, it guaranties loans made by lenders. To obtain a VA loan you may locate a lender using Mortgage-Net. Lenders will normally require a Certificate of Eligibility before they can process a VA loan. This may be obtained by sending the form DD-214 to the local VA office along with VA form 1880.

Lenders offer 30 yr. fixed, 15 yr. fixed and 30 yr. adjustable loans under the VA program. The VA loan limit for 1996 is $207,000. The most attractive feature of a VA loan is that no down payment is required. In addition, it is easier to qualify for a VA loan than a conventional loan. This is because the loans are guaranteed by the U.S. Department of Veterans Affairs.