VA Adjustable Rate

The VA Hybrid ARM product provides for an initial fixed interest rate for a period of 3 or 5 years, and then adjusts annually.

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Frequent Question # 8:
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VA Home Loan Entitlement
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Some first-time homebuyers are misinformed as to the workings of a VA Loan. The Veterans Administration does not normally act as a lending agent. Instead, the VA is in the business of guaranteeing the loans of veteran. In most cases, the VA offers a guaranty to those who meet the requirements, the first of which include a good credit rating. If you are considering any kind of home loan, it's best to consult a credit counselor and a financial planner to find out what credit rating you already have and what you can do to improve your credit rating before applying for the guaranty. It's important to know that a VA home loan guaranty is available only if the veteran has the income to handle house payments. A VA loan guaranty is not an automatic benefit. Your financial planner or credit counselor can go a long way towards helping you prepare your personal finances before filling out that home buyer's paperwork. -- -- -- -- -- -- -- --

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VA ARM - Adjustable Rate Mortgage for the military.

The VA Hybrid ARM product provides for an initial fixed interest rate for a period of three or five years, and then adjusts annually after the initial fixed period. The 3/1 and 5/1 VA Hybrid ARM products allow a 1% annual interest rate adjustment after the initial fixed interest rate period, and a 5% interest rate cap over the life of the loan. Interest rate adjustments must occur on an annual basis, except for the first adjustment which may occur no sooner than 36 months from the date of the borrower's first mortgage payment on the 3/1 ARM or 60 months from the date of the borrower's first payment on the 5/1 ARM. The loan term is 30 years for either of these loans.

INDEX AND MARGINS
The index is the weekly average yield on U.S. Treasury Securities adjusted to a constant maturity of one year. Also known as the 1-Year Constant Maturity Index. VA ARM loans have either a 2.00% margin or a 2.25% margin.

LIFE CAP
Initial Note rate plus 5%

ADJUSTMENT CAP
One percent (1%) annually after the initial fixed rate period of 3 or 5 years.

FIRST ADJUSTMENT DATES
Government loans only adjust 4 times per year (January 1, April 1, July 1, and October 1). The loan's first adjustment will occur with the corresponding adjustment period that follows the initial fixed period. For example, if the initial period ends in February, the rate will adjust in April and then annually thereafter until maturity.

3/1 VA Hybrid ARM: the first rate adjustment will occur between the 36th and the 42nd payment due date.

5/1 VA Hybrid ARM: the first rate adjustment will occur between the 60th and the 66th payment due date.

QUALIFYING RATE
Initial Note Rate

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