VA Hybrid ARM’s are a loan program that combines the benefits of a fixed rate mortgage with the flexibility of an adjustable rate mortgage. This loan option can be a suitable option for many homebuyers. Let’s take a look at how these loans work and when you should consider using them.
How They Work
A VA hybrid ARM starts out with a fixed interest rate and the rate remains fixed for either 3 or 5 years. For example if you have a 5/1 VA Hybrid ARM the fixed rate period is 5 years.
After the fixed-rate period is up the mortgage interest starts to adjust. There are limits placed to protect you from extreme changes in interest rate adjustment. The rate can only change a maximum of 1% up or down once a year. The VA has also placed a 5% maximum on the amount the interest rate can fluctuate during the life of the loan.
Here are some of the VA hybrid ARM lending terms:
3/1 loan – Your rate is fixed for 3 years before it starts adjusting annually.
5/1 loan – Your rate is fixed for 5 years before it starts adjusting annually.
As you can see here they have gone to great lengths to make this loan program a realistic option for many veterans. Be sure to talk the option over with a VA mortgage professional to make sure that it is right for your situation.
When to Consider a VA Hybrid ARM
Considering a VA Hybrid ARM comes down to you and your specific situation. One of the things to look at is how long you intend to live in the home. If you are moving around or anticipate you will move in the future the VA Hybrid ARM is a great option. But if you think that you have found the home of your dreams, that you will live in until you die, then the hybrid ARM would not be the best option.
It is common for individuals to rule out a VA Hybrid ARM because it has ARM in the name. Be sure to carefully evaluate your situation before ruling out this option too quickly.
Work With a Professional
With the VA Hybrid ARM, and any other loan program, it can be very helpful to get someone who is familiar with all the different loan programs available. They will be able to look at your unique situation and then give you advice on which loan program will work best for you.
Fill Out this Online Form to find out what you qualify for and one of our experienced loan officers will get in touch with you to talk about your situation.