Second Mortgage

Ohio hybrid loans are a combination of a fixed-rate loan and an adjustable-rate Ohio mortgage (ARM).

Typically, a hybrid starts out with a fixed rate for a certain length of time and then later converts to an ARM. These loans carry less risk than a 1-year ARM, and the interest rate is generally lower than that for a fixed-rate Ohio mortgage.

Since many homeowners remain in their homes an average of 7 to 10 years, Ohio hybrid loans are a good choice, allowing the borrower to take advantage of a lower interest rate in the first few years of the mortgage.

Hybrid Ohio mortgages include: Ohio Balloon mortgages, Ohio Graduated-payment mortgages, Growing Ohio equity mortgages, Temporary buydowns & The Flex ARM program.
Ohio Balloon loans are short-term mortgages that have some features of an Ohio fixed-rate loan. They offer an initial interest rate that is lower than that for fixed-rate mortgages. The Ohio balloon mortgage keeps this low fixed rate for 5 to 7 years and then requires a “balloon” payment.

The Ohio balloon payment is the final payment of the loan .and pays off the entire balance. Balloons are also called bullets, demands, or calls, referring to the one-time payment. Monthly payments are low because the payments for those first 5 to 1 years are amortized at a low interest rate over the total length of the loan, which is usually a 30-year term.

The benefits of this type of Ohio mortgage product are: The lower interest rate and payment, which means that the Ohio mortgage payments are more affordable, which means that the borrower can qualify for a larger mortgage Having an Ohio balloon payment is a gamble.

This type of loan program does carry risks. To address the risks, FNMA and FHLMC developed a feature for converting the loan to a fixed-rate loan after the balloon; this is referred to as a conditional refinance. It is important for your borrower to know that a balloon mortgage is not an ARM—that a conditional offer to refinance at maturity does not guarantee financing.

This feature is the same as the provisions contained in ARMs with a conversion option— the ability to convert to a fixed rate. The right to refinance is called conditional because certain conditions, or requirements, must be met to give the borrower a right to convert to a fixed rate.

Those requirements include Ohio mortgage payments must be current. No payments can be more than 30 days late during the past year. The property must be owner-occupied. There can be no second Ohio mortgage liens on the property. The rate of conversion can be no more than 5.0% over the current note rate, or the lender can refuse conversion. A written request must be made to the Ohio mortgage holder within 60 days of the maturity date.