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Fannie Mae Introduces Hybrid Product For Small-Loan Line

“Borrowers like it because they don't have a balloon payment at the end of the fixed rate period.”

By Erika Morphy | erikamorphy | Updated on September 20, 2017

Former Fannie Mae Headquarters. Photo by Wikipedia.

WASHINGTON, DC–Fannie Mae has rolled out a new product for its small-loan product line: a hybrid, adjustable rate loan with flexible long term financing and an array of prepayment options.

It is a 30-year mortgage fixed for a period of 5, 7 or 10 years. Once the fixed-rate period ends it automatically converts to an adjustable rate, which is tied to the spread over the six-month Libor. There are caps built into the adjustable rate so the loan doesn’t fluctuate too wildly when rates change.

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