Is a VA Hybrid Loan Good or Bad?
Many veterans are wondering if a VA Hybrid loan is good or bad. Recent history has shown that the VA hybrid loan has been a very safe and well performing loan and has saved veterans a lot of money. The VA in general would not allow the loan if they thought that it might be an unsafe risky loan for its military members and veterans. Generally speaking the VA hybrid loan is a very good loan. As a matter of fact the department of Veterans affairs backs and protects VA lenders in case a loan were to default. So the VA wanted to make sure that veterans are getting safe and secure home loans. The VA did this by putting in safety measures in the case that interest rates skyrocket. If interest rates have increased significantly after the fixed period of the loan the VA has put in a 1% annual cap. This means the rates can only be raised 1% per year. So if Joe Veteran has a 5 to 1 VA Hybrid loan at a 2.50% interest rate in the first five years the interest rate can only go up a maximum of 1% a year after year 5. So worst case scenario in year 6 Joe’s interest rate would be 3.50% and year seven it would be 4.50%. In year eight it wold be 5.50% etc. The VA also put in a 5% lifetime cap in case interest rates keep climbing over a 5 year period. In this example the interest rate would max out at 7.50% lifetime if Joe Veteran wanted to stay in the loan. Another good thing about the VA Hybrid loan is they use the CMT index. The CMT index has proven to be a very stable index over the years. This means that interest rates are not going to rapidly jump all over the place making the VA hybrid arm loan a good stable loan.
VA Hybrid Loan Good or Bad Conclusion
Overall the conclusion on whether a VA hybrid loan is good or bad is a no brainier. The VA hybrid arm loan is one of the best loans on the market in terms of saving you money with lower interest rates, lower payments and safety caps put in place. The facts are, with a VA hybrid arm loan you are going to pay down your principle faster with a lower monthly mortgage payment for the first 3, 5, or 7 years of your loan depending on what hybrid loan you might have. If you are a veteran looking to purchase a new home or wanting to refinance an existing home and would like to learn more about this option call 1-855-956-4040 to learn more about how the VA hybrid loan. This loan option can help you save more money with a lower interest rate and help you pay down your principle faster by paying for less interest than a 30 year fixed rate mortgage. Call now to discuss your situation and see if the VA hybrid loan is the best option for you. call 1-855-956-4040
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