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30 Yr Traditional Loan Vs. VA Hybrid - Which is Better?

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This deck compares a traditional 30 yr home loan to a hybrid loan covering the pros and cons of each and what can be better for your situation.

Veröffentlicht in: Immobilien
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30 Yr Traditional Loan Vs. VA Hybrid - Which is Better?

  1. 1. Are 30 YR Fixed Rates Safer Than VA Hybrid Arm Rates? What you think is true is about to be turned on its head!
  2. 2. Common Beliefs About 30 YR Fixed Rate Loans • Much safer than a hybrid arm loan • Better for people wanting to just payoff their home/loan • Better for someone that wants to live in their home for a long time or forever • Makes budgeting easier • Much easier for fixed income or retirement aged
  3. 3. Common Beliefs About VA Hybrid Arm Loans • Dangerous when compared to a fixed rate • Only makes sense if you do not want to pay off your home loan • Intended for someone who will be moving soon or does not plan on staying in their home long term • Makes budgeting more difficult • Not a good loan for someone about to retire or on fixed income
  4. 4. 30 YR Fixed VS. VA Hybrid Arm Loan • Lets define “SAFE” – Secure from danger or harm. Affording protection • Home owners want certainty • That their home is not going to fall down • That they can afford the payments at anytime • That they can keep the power, heat and lights on • Home owners want to feel SAFE
  5. 5. Which Loan is Safer? Fixed or Hybrid • Based on our experience in dealing with military home owners. Safety with regards to the mortgage refers to the ability to make monthly payments • The natural thought is that the 30 yr fixed rate will be the safest, most secure. However, when looked at in real life facts, there are many more times when the hybrid loan is the “safer” of the two loans
  6. 6. Why is the VA Hybrid Loan Safer? • Your payment is MUCH LOWER on the VA hybrid 1. Allows you to pay your loan down faster 2. Allows you to save money for those “rainy days” 3. Allows you to pay off other HIGHER RATE debt at a much faster pace 4. A 30 yr payment will still be $2500 20 yrs from now! It does not matter if your balance is only $10,000, you will pay the same each month as you did at the very first day
  7. 7. Which loan allows you to pay off your home faster? • Making additional principle payments is much easier on a VA hybrid. If you can afford $2500 fixed payment, your VA hybrid could be as low as $2000. That allows $500 more toward your balance each month. • VA hybrid loans due to the much lower interest rates will normally pay down your loan balance up to $25,000-$35,000 faster in the first 5-7 yrs. • Getting an inheritance, winning the lottery or an insurance payout will not make a difference on either loan. Just pay it off and be happy!
  8. 8. Is the 30 yr Fixed Rate better if I want to be in my home forever? • Again, whether or not you will be in your home forever is really not a valid question. You should ask, Will I be in my loan forever? • You should now realize that the VA hybrid loan will allow you lower payments and the ability to pay your loan down faster. • You should also now know you will not be in the same loan 4-5 yrs from now in most cases, therefore a fixed rate should not really be considered.
  9. 9. Which Loan is Better for Budgeting, a VA hybrid or 30 yr fixed? • A 30 yr fixed payment can only go up after day one. If your borrower $350,000 at 4.25% you will pay $1721 forever and your taxes and insurance will go up thus making your payment go up! • Even when your balance is at $50,000 you will still be paying $1721 or more. What about fixed income or being laid off or emergencies? • A hybrid payment will be lower as your balance goes down even possible when interest rate increases. • For example, you get the balance paid down to just $250,000 and the rate hits 5% your payment could be as low as $1649 with 20 yrs left on the loan. • The hybrid loan re-amortizes every year after the fixed period. Your payments get recalculated at the lower balance. A 30 yr fixed loan never recalculates even as the balance owed goes down.
  10. 10. Budgeting, fixed income or retirement? • Based on previous slide, it should be clear that the VA hybrid loan is much safer for someone looking to have a fixed income or heading into retirement. • Assume you know you will only be making $X.00 per month for the rest of your life. Can you afford to know your mortgage payment may increase even when your home is almost paid off?
  11. 11. "I would like to thank you All of you at LowVARates for getting me the LOWEST rate possible in a orderly and timely manner and it was so EASY to apply and get all the paper word done and your people keeping in touch and updating the status of the loan every few weeks ! You guys did a FANTASTIC JOB getting my VA Loan approved and saving me a lot of money in the life of this loan while dropping my monthly payment a decent amount that I could use for other things or to save up for my retirement !!! so I want to Thank You again ALL of you and keep doing a good job !! Edgar C
  12. 12. Thank you for watching Are 30 YR Fixed Rates Safer Than VA Hybrid Arm Rates?.