Blended Rate^® Mortgage

This innovative home financing solution offers the best of both worlds:

• Lower rates than most fixed-rate mortgages.
• Less risk than most adjustable-rate mortgages.

Is the Blended Rate^® mortgage right for me?

The Merrill Lynch Blended Rate^® mortgage is a 25-year LIBOR-based adjustable-rate mortgage (ARM) that combines the benefits of a fixed rate and an adjustable rate for an initial period of 3, 5 or 7 years.¹ During this time, you can benefit from lower rates than for most fixed-rate mortgages and gain more protection against rising rates than an ARM. The combined rate increases or decreases about half as much as the adjustable rate.

In addition, the Blended Rate^® mortgage provides interest-only payments during the initial period followed by fully amortized payments for the remainder of the term.² By making interest-only payments, you can reduce your monthly payments during the initial period giving you greater control over your cash flow.

Who can benefit from the Blended Rate^® mortgage?

The Blended Rate^® mortgage can be an appropriate choice for those who:

• Want lower monthly payments than a traditional fixed-rate mortgage.
• Want more protection against rising rates that an ARM.
• Want flexible payment options for greater control over cash flow.
• Plan to own a home for 7 years or less.

What are the features of a Blended Rate^® mortgage?

• A 25-year, LIBOR-based adjustable-rate mortgage available with a choice of a 3-, 5- or 7-year initial combined-rate, interest-only period.^1,2
• Fully amortized payments of principal and interest for remainder of term after initial combined-rate, interest-only payments.

• Your choice: rates that adjust monthly based on the one-month LIBOR index; or semi-annually based on the six-month LIBOR index. LIBOR is the London Interbank Offered Rate, a published index such as the prime rate or Constant Maturity Treasury (CMT) indices in the United States. 

• Historically, the LIBOR index has been lower than the prime rate.
• Although past performance is not indicative of future performance, the one-month and six-month LIBOR indices never rose above 7% in the last 12 years.
• Large loan amounts available, including jumbo loans.
• Repay principal as much or as fast as appropriate without penalty.
• Lifetime rate cap is the greater of initial rate +5%, or 12%.

¹If interest rates increase, your monthly mortgage payments may also increase. When deciding whether an adjustable-rate mortgage is right for your situation, you should consider the potential risk of rising rates and such factors as how long you plan to own your home.

Click here for Important Loan-Cost Disclosures.

²This is an “interest-only” mortgage that allows you to pay only the interest on the money you borrow for a certain number of years. If you only pay the amount of interest that’s due, once the interest-only period ends, you will still owe the original amount you borrowed and your monthly payment will increase – even if interest rates stay the same – because you must pay back the principal as well as interest. You should ask what the payments on your loan will be after the end of the interest only period. If you are considering an adjustable-rate mortgage, ask about what your payments can be if interest rates increase.