Facts Regarding VA Hybrid Loans

During these times of financial turmoil, most everybody, even military members, have had cash flow problems. For some, having a hybrid VA loan is a good choice to address the problem. It is not unusual for veterans or service members to get mailed cards or fliers touting the advantages or a VA hybrid loan. These so called streamline loans offer rates of around 3% a.p.r., or even lower. These rates can be locked in for 3-5 years.Adjustable Rates Cause Concern about VA Hybrid LoansThe hybrid VA loan causes some butterflies in the stomachs of veterans or military members. That is probably because of the adjustable rate aspect of it. After the 3-5 years are up, the interest could start to vary according to the whims of the financial markets. So, a natural fear of the future presents itself.Present Needs, Future ConcernsThinking about the future is never a bad idea, but fear of the future should not preclude looking to address needs of the present. Saving money now may be a better step than worrying about what happen down the line. Ergo: this basically comes down to a risk versus reward question that each service member or veteran has to ask themselves. If a veteran or military member finds him- or herself in a financial bind at the present and needs to set aside as much money as possible for whatever immediate need, a VA hybrid loan may be a good option. If the veteran or military member knows that a move is imminent within the next 3-5 years, it could be a good thing.VA Hybrid Loan Combines AdvantagesKnowing the intricacies of the VA hybrid loan is essential before seriously considering whether it is right for the service member or veteran. Of course, the term HYBRID means that the loan is a combination. The VA took the best that a fixed rate mortgage has to offer and combined those with the better aspects of adjustable rate mortgages. In spite of the cautionary talk regarding adjustable rate mortgages, they do offer some benefits.VA Hybrid Loans Actually Minimize RisksThe VA has endeavored to offer as many advantages as possible on VA hybrid loans while limiting the risks. Here are two cases in point: Interest Rate Fixed. The interest rate on it is fixed and guaranteed for the first 3-5 years. After that period, the rate can be adjusted only once every 12 months. Do not forget, after that period, rates could even drop. The Index. The index or the component that makes a loan adjustable, is a very stable index that moves slowly (1 yr CMT).Regular VA Loans and Hybrid VA LoansIf a veteran or service member is carrying a regular VA loan, it is easy to switch to a streamline or hybrid loan. Many veterans and service members study their financial situation and often see that they do need to address a present cash-flow problem. The hybrid VA loan can provide that relief; even though they intend to keep their home far into the future. After 3-5 years have elapsed, the veteran or service member can always switch back to a standard VA loan if they feel spooked by the adjustable rate aspect of a VA hybrid loan.No Right or Wrong Answers Regarding VA Hybrid LoansEach veteran or service member will have to analyze their own financial situation to see if a VA hybrid loan would work for them. It could do well in one situation, be a train wreck in another. If a veteran or service member is considering a refinance of their mortgage, a good conversation with a loan officer could help him or her decide whether or not a hybrid VA loan is right for them.