VA Hybrid ARM
VA Loan Adjustable Rate Mortgage
When it comes to buying a home and locking in an interest rate, many homeowners-to-be jump straight to a fixed-rate mortgage. Because this type of mortgage means homeowners can be sure their interest rates won’t change over the course of their loan, it can seem like the safest bet.
But for military homebuyers, another option is certainly worth considering. A VA adjustable-rate mortgage, or ARM, makes actually be a smart choice for veterans and especially active duty military members.
This is because buyers hoping to purchase a home through a government-backed program like the VA have an inherent advantage — these loans are specifically designed to minimize financial risk. And since buyers using adjustable-rate mortgages are susceptible to more risk already, the built-in precautions of a government loan program can level the playing field.
And taking on the extra uncertainty that comes with ARMs can also mean more opportunity for reward. That’s because these mortgages begin at lower interest rates than fixed-rate loans, meaning less money out of pocket for buyers. With these savings, it may be possible to qualify for a bigger home loan.
ARMs are also especially beneficial for homebuyers who do not plan to live in the same place for long. And since constant relocation is a part of life for many of those still serving in the Armed Forces, this mortgage option can be a wise choice in keeping expenses to a minimum. For those who find a loan when interest rates are steady or falling, an adjustable-rate mortgage will be easier to keep under control.
A traditional adjustable-rate mortgage starts with a low interest rate that is subject to change each year based on external economic factors. However, a new type of ARM is becoming more and more popular — the hybrid ARM.
With this type of mortgage, homeowners have a fixed rate for three to five years before their interest rates are subject to annual adjustments. With these 3/1 and 5/1 VA Hybrid ARMS, homeowners can have a degree of certainty regarding their loan for the first couple years. So for military homeowners permanent change of station within 3-5 years, the hybrid ARM can be a savvy solution to build equity and save money.