The VA hybrid Arm loan is perhaps one of the most attractive loans on the market for qualifying veterans. As part the of the the Home Loan Guaranty program VA Hybrid Loans are for active military or veteran home owners that may sell their home or get a second loan in the next 5 to 8 years.
VA Hybrid Loans have a 3 year or 5 year fixed rate depending on the loan program a person chooses. After the fixed rate period the rate of the loan cannot go up more than 1 percent per year it can also go down. VA Hybrid Loans are tied to the U. S. Treasury Index and have a margin of 2.00 percent or 2.25 percent. The adjustment cap over the life of the loan is 5 percent over the initial rate of the note. The yearly rate adjustment cap results in; more monthly savings, faster mortgage payoff, and faster breakeven periods. VA Hybrid Loans have much lower interest rates than conventional 30 year fixed mortgage rates with no additional fees or finance charges.
5/1 Hybrid loan this option has a fixed rate for five years. 3/1 Hybrid loan has a fixed rate of 3 years. Deciding if you should get an adjustable rate mortgage or a fixed rate VA Loan takes a lot of planning and consideration. One needs to take into account; how long you plan to keep your home, the stability of your job, if you are buying a home, taking out a second mortgage, or refinancing your home. Also a person needs to consider what they think the future mortgage interest rates will do.
Is a VA hybrid loan a better option?
Is the VA hybrid arm loan a better option than a standard VA 30 year fixed mortgage? In many cases yes because you will likely be saving money on your monthly mortgage payments that you can apply down on your principle. If you do the math after 5 years you could be saving a substantial amount of money with the lower interest rate and lower monthly mortgage payments. As with any arm loan there are pros and cons and it is important to due your due diligence.
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