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Meaning / Definition of

Risk Analysis

Categories: Insurance, Statistics and Risk Management,

the identification of risks to which an organization is exposed and the assessment of the potential impact of those risks on the organization. The goal of risk analysis is to identify and measure the risks associated with different courses of action in order to inform decision making. In the context of business decision making, risk analysis is especially used in investment decisions and capital investment appraisal. Risk analysis may be used to develop an organizational risk profile, and also may be the first stage in a risk management program.

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Definition / Meaning of

Hybrid Mortgage

Categories: Finance,

Sometimes called an intermediate ARM, a fixed-period ARM, or a multiyear mortgage, a hybrid mortgage combines aspects of fixed-rate and adjustable-rate mortgages.The initial rate is fixed for a specific period - usually three, five, seven, or ten years - and then is adjusted to market rates. The adjustment may be a one-time change, or more typically, it changes regularly over the balance of the loan term, usually once a year. In many cases, the interest rate changes on a hybrid mortgage are capped, which can help protect you if market rates rise sharply.One advantage of the hybrid mortgage is that the interest rate for the fixed-rate portion is usually lower than with a 30-year fixed-rate mortgage. The lower rate also means it's easier to qualify for a mortgage, since the monthly payment will be lower. And if you move or refinance before the interest rate is adjusted - the typical mortgage lasts only seven years - you don't have to worry about rates going up.However, some hybrid mortgages carry prepayment penalties if you refinance or pay off the loan early. While prepayment penalties are illegal in many states, they are legal in others.

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