• Nichole Fox

The VA Hybrid ARM Loan

A VA Hybrid ARM loan is a special type of loan that offers the low rates of an adjustable mortgage, coupled with the security of a fixed rate loan. In the case of a VA Hybrid ARM loan, the loan is fixed for a few years, and then it turns into an adjustable rate mortgage after that. The rate can then change each year, on its anniversary date based on index, margin, and cap.

There are limitations on how much the interest rate can adjust. Once the initial fixed rate term is up, the loan may only go up or down by a maximum of 1% per year. In addition, there is a fixed lifetime cap at 5% over the starting interest rate. This means that the loan can never be adjusted to more than 5 points higher than it was when it was when it was first obtained.

You can choose from several options, the most popular of which are the 3/1 ARM and 5/1 ARM.

How does a 3/1 VA Hybrid ARM loan stack up against the 30-year fixed in terms of savings? Let's take the worst case scenario and assume interest rates are rising at their maximum pace. It would take at least 5 years before interest rates catch up with their 30-year fixed counterparts! And it would take another three years before you would even begin to equate the 30 year loan in interest payments.

On average, most people keep their home for 6 years before they decide to sell and move. And very few people tend to keep their same mortgage, even if they do decide to remain in their homes for the full 30 year term.

If you'd like to know how much you could be saving with a VA Hybrid ARM, contact one of our loan officers.

61 views0 comments

Recent Posts

See All

(888) 659-0033

©2020 by Freedomstar Financial, Inc. 

 All Rights Reserved. We are not affiliated with any government agencies, including the VA, FHA, or HUD.   CA - Loans will be made or arranged pursuant to Bureau of Real Estate License #01984665; CO Mortgage Company Registration 100054512, Regulated by the Division of Real Estate; Florida MBR License #2065. GA Residential Mortgage Licensee; Mortgage Lender License #70335. Regulated by the Bureau of Financial Institutions, Virginia Mortgage Lender License and Mortgage Broker License #MC-7043.  Click on these links to access our Privacy Policy. Licenses, and NMLS Consumer Access - NMLS #1439059. This offer is intended for residents of CA, CO, FL, GA, TX, and VA only.

Freedomstar Financial, Inc. | 111 Deerwood Drive, Ste 200 | San Ramon, CA | 94583
518 N. Chelton, Ste 200 | Colorado Springs, CO | 80909

*Product offered is a loan and lender will place a lien on subject property. Borrower is responsible for paying property taxes, homeowner's insurance and home maintenance. Loan is subject to foreclosure for failure to pay taxes and insurance to maintain the property and to comply with loan terms. Loan Officers' primary objective is to provide a loan to the consumer. Individuals portrayed in photography are not actual borrowers.