VA Hybrid Loans: The Definitions

Understanding the terminology for VA Hybrid Loans is important before you meet with a mortgage adviser. You want to have a clear understanding of the options that are presented to you. This way you will make the most informed and comfortable decision for your family.

This article will define three types of mortgages: fixed-rate, adjustable-rate, and VA Hybrid Loans. These definitions will clarify the main attributes of these loans. By the end of this article, it should be clear what each of these loans can offer you.

Fixed-rate Mortgage

These loans have unchanging interest rates for the whole time of the loan. The most popular lengths are 15 and 30 years. Assuming you don't refinance or sell your home, you can expect your interest to remain exactly the same from start to finish. These loans are popular because you know exactly what to expect for the whole life of the loan.

Adjustable-Rate Mortgage (ARM)

Unlike the fixed-rate mortgage, the interest rates in an ARM can change. Sometime they change frequently: multiples times in a year. ARMs will start with a teaser rate (a lower rate to get you in the door) that changes (usually upward) after the first year.

VA Hybrid Loans

These loans mix the best attributes from ARMs and fixed-rate mortgages. You get the security of an unchanging interest rate for the first 3 or 5 years. You start with a lower interest rate because of the VA Hybrid Loans' adjustable-rate features. AND as a bonus, you interest rates can be even lower because these loans are partially backed by Veteran Affairs. You also have a yearly cap of 1% and a lifetime cap of 5%.

It's easy to see why VA Hybrid Loans are growing in popularity among veterans. You can only get these loans from a VA-approved lender. Please call one of our VA-approved lenders now to understand more.