What are VA hybrid adjustable loans and are they a good idea?
VA Hybrid Adjustable Loans: In Simple Terms
When you get a VA loan, you can choose from a fixed rate, 30 year VA loan or an adjustable one. Most of the VA approved lenders will have one adjustable rate VA loan program – the 1-year adjustable rate VA loan. It is fixed for a year, then it will adjust up or down for every other year that you have the loan. Many lenders are starting to come out with “hybrid” VA adjustable loans – where the interest rate will be fixed for the first 3, 5, 7 or 10 years of the loan and then adjust each year after the initial period.
Each lender will generally have slightly different hybrid adjustable loan period terms and maybe different indexes that the rate is tied to, or margins that the rate can adjust – but the general idea is this:
A VA hybrid adjustable loan will be fixed for a period of time and then adjust. The “normal” fixed periods are either 3, 5, 7, or 10 years – but really any starter period is possible.
Are VA Hybrid Adjustable Loans a Good Idea
Generally speaking, VA hybrid adjustable loans are possibly a good idea – depending on how long you plan on staying in your house. The introductory rate will be lower than a 30 year fixed rate VA loan – so you can save some money during the hybrid/introductory period by having a lower rate. For example, if you were going to be in your house only 5 years and you got a 7 year VA hybrid adjustable loan, you might be able to save 1% on your note rate for the entire time you lived in your home. Is that a good deal? Each situation is different.
VA Hybrid Adjustable Loan Lenders: Not All The Same
When it comes to finding the right lender who can help you with a VA hybrid adjustable loan, not all lenders are the same. Each lender will have a different set of loan programs, slight guideline overlays and different rates. If you are interested in possibly getting a VA adjustable hybrid loan, it is important to speak with multiple VA approved lenders who can help you get the right loan for your situation.
Get matched with a great VA approved lender today – submit your information below and a VA approved lender will be in touch with you about your situation.