If you are in the market for a new home and you are eligible for a VA loan you should consider it. Not like should is to be interpreted as you have to, but rather – think about the advantages it offers over regular conventinoal financing. If these advantages fit with you, then you should consider getting in touch with your local VA mortgage lender to see what’s possible for you.

First we’ll talk about money – the VA loan offers a 100% financing. You can’t get this with any other home loan program except the USDA mortgage program. But the USDA program is only for homes located in rural areas and has some other income requirements that make it a tougher program to use.

Next, with conventional (Fannie Mae and Freddie Mac) loan programs if you don’t put at least 20% down on the home you will be paying PMI – private mortgage insurance. The amount of PMI you pay each month is based on your credit scores, the amount of down payment you pay, and the type of loan program you get – adjustable rate mortgage or a fixed rate mortgage or an interest only mortgage. However with VA loans, you don’t have to pay PMI so you’ll save some money on your monthly payment when compared to the same loan amount with a conventional mortgage.

Last, but not least, in today’s economy it seems like many folks have had some challenge in their past credit profile – with the VA if you have corrected the issue and have a good reason for why it happened you may still qualify. The VA has flexible credit guidelines and they don’t have a strict hard line on credit scores. And even with more flexible credit guidelines you can still take advantage of the very low VA rates when it comes to the interest rate you can get.

In today’s marketplace when we hear the word hybrid and almost immediately think of green energy are some sort of new automobile. What does the word hybrid really mean? Hybrid is when you take parts from two or more items and put them together for a better outcome. When we think of a hybrid loan for veterans or VA loans we should immediately think of both the fixed rate mortgage and the adjustable rate or veritable. The main characteristic of the VA hybrid is that it carries a fixed rate mortgage for a period of time and then the interest rate becomes adjustable after that fixed rate period.

The Department of Veterans Affairs offers to eligible veterans to types of hybrid loans. The first, is the 3-1 hybrid and the second is the 5-1 hybrid. LowVARates is well aware of the big misconceptions, misunderstandings, and flat our rumors that exist in the marketplace about VA hybrid loans. We hope to dispel these rumors and educate eligible veterans on the truth about the VA hybrid loan.

The following is a list of common misconceptions or rumors about the VA hybrid loan:

• it is an adjustable-rate mortgage and will cause me to lose my home.
• This is the type of our loan that the media has warned against.
• The interest rate can go as high as it wants.
• I will never pay my balance down.
• This is not a VA loan, because the Department of Veterans Affairs would never endorse this type of loan.

LowVARates will dispel these rumors and teach eligible veterans the truth about the VA harbored loan and how it may benefit them.

Many veterans think that because the VA hybrid loan does have an adjustable rate; this fact alone will cause them to eventually lose their home. The truth is, this loan does have an adjustable interest rate, however this is a much more stable interest rate than all other adjustable-rate mortgages. The Department of Veterans Affairs requires that VA lender’s use a very stable index, known as the CMT. The CMT index is a monthly average of the U.S. Treasury index. The treasury index is one of the most stable financial indexes from a historical perspective. In regards to veterans losing their homes, an adjustable-rate mortgage and the payment goes along with it has nothing to do with those individuals who have unfortunately lost their homes. Those individuals who lost their homes were most likely put into a mortgage that did not benefit them, or bought a home that they never intended to be able to afford. The VA has never allowed veterans to use a stated income loan or to buy a home which is more expensive than what the veteran can afford.
Our society has become more and more dependent upon the media for gathering information. This is not a bad thing by itself, however, when the media is filling our minds with incorrect information a problem does arise. The fact the matter is most of our mainstream media has actually no knowledge VA loans or even the mortgage industry in general. There is some truth to the idea that the media has created, which is that adjustable-rate mortgages should be avoided at all costs. There is a big difference between a standard adjustable-rate or conventional adjustable mortgage and the VA hybrid adjustable mortgage. When the media talks about all of the negative parts of adjustable-rate mortgage the media is referring to the option arm loan, the subprime arm, and other conventional adjustable rate mortgages.

Many veterans think that the interest rate on the VA hybrid arm can go as high as it wants. There is nothing further from the truth than this. The VA hybrid loan has both annual interest rate caps and lifetime interest rate caps. Let’s look at the 5-1 arm for example. The interest rate on the 5-1 hybrid arm cannot increase at any time in the first five years of the loan. The interest rate in essence is fixed for a minimum of 60 months. Once the five-year introductory period is up then the interest rate can only go up 1% per year. Most veterans don’t stop to realize that the interest rate can also go down 1% per year. The fact that the Department of Veterans Affairs has put interest rate Is on this loan show is that the VA is focused on creating an adjustable-rate mortgage that has protection against rising interest rates. Just like there are any ON the VA hybrid loan, there are also lifetime caps. Assuming veteran This loan until they pay off the home or until they moved, the interest rate can never go higher than 5% from where it started. For example if your start rate on the hybrid loan is 3% then you could never have an interest rate higher than 80% anyway take you at least 10 years to get that high.

If you have considered getting a VA hybrid loan in the past and have been told that you will never pay your balance down, you two have been majorly misguided. An interest only arm or an option arm are the only types of adjustable-rate mortgages that allow you to make a payment each month and not affect or pay down your principal balance. The VA hybrid loan is a fully enterprise adjustable-rate mortgage which means every single payment is applied towards a portion of the principal costs decreasing the balance on a monthly basis. As a matter of fact, the VA hybrid arm will pay your principal balance down faster for the first three or five years then a fixed-rate mortgage will in today’s lending environment.
Finally one more rumor and false information about the VA hybrid is that this cannot be a VA loan because the Department of Veterans Affairs would never guarantee or endorse an adjustable-rate mortgage. President Bush, right before he left office signed into law the veterans benefits improvement act of 2008. As part of the veterans benefits improvement act, the Department of Veterans Affairs renewed its effort to issue hybrid loans or VA adjustable-rate mortgages to veterans. The VA hybrid loan is backed by the Department of Veterans Affairs and the Department of Veterans Affairs actually guarantees to the VA lender that this loan will perform and be safe for veterans.

The moral of this story is don’t believe everything you hear in the media about veterans and adjustable-rate mortgage loans. Yes there are some toxic and dangerous arm loans or adjustable-rate mortgages in the marketplace, however the VA hybrid loan is not a dangerous loan when used correctly. If you’re a veteran and you would like to know how the VA hybrid loan can help you please contact approve the lender by visiting www.lowvarates.com.

Many veterans who are currently in a VA loan are hearing about the VA streamline refinance program (also known as the VA IRRRL program) and have had someone tell them that “there is a minimum credit score requirement” for the Illinois VA streamline refinance program.

Which is kind of true.

Realizing that the words “kind of true” can be confusing — here is why “kind of” fits:

VA doesn’t actually require a minimum credit score, but many lenders do.

As you are probably aware, the VA doesn’t actually lend you money, various VA-approved lenders actually lend you the money and your loan is insured by HUD in the event of a default. So because VA isn’t the organization who is actually lending you money, if a certain lender has a guideline that requires a minimum credit score for the VA streamline refinance program, that guideline must be met.

VA Streamline Refinance: What Minimum Credit Scores Apply?

For many lenders right now, the minimum credit score for the VA streamline refinance is 620. There may be a select few that don’t require a minimum credit score, but most of the lenders offering the VA streamline refinance are requiring a 620.

So if your mid credit score is below a 620, and you have a lender (or two, or three…) tell you that they require a 620 minimum credit score, be sure to ask them if they are aware of any other lender who doesn’t require a minimum credit score for a VA streamline.

I am aware of at least one!

The Illinois Mortgage Rates site has officially launched! We will work hard to bring you the latest Illinois mortgage related information such as information about:

• Mortgage rates
• Lenders
• Loan officers
• FHA mortgage loans
• VA mortgage loans
• HomePath mortgages
• Reverse mortgages
• Government regulation
• Illinois mortgage news

and much, much more.

Please contact us directly with any questions that you may have about mortgages and we will work hard to provide the right answers!