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30 Yr Traditional Loan Vs. VA Hybrid - Which is Better?
Are 30 YR Fixed Rates Safer
Than VA Hybrid Arm Rates?
What you think is true is about to be turned on its head!
Common Beliefs About 30
YR Fixed Rate Loans
• Much safer than a hybrid arm loan
• Better for people wanting to just payoff
• 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
Common Beliefs About VA
Hybrid Arm Loans
• Dangerous when compared to a fixed
• 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
30 YR Fixed VS. VA Hybrid Arm Loan
• Lets define “SAFE” – Secure from
danger or harm. Affording
• 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
• Home owners want to feel SAFE
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
Why is the VA Hybrid Loan Safer?
• Your payment is MUCH LOWER on the
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
Which loan allows you to pay off your
• 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!
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
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.
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
• 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?
"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 !!
Thank you for watching
Are 30 YR Fixed Rates
Safer Than VA Hybrid Arm Rates?.