The VA offers home loan guarantees with different interest rate options. In this blog, we talk about the two popular options that allow veterans to increase the flexibility of their VA home loan options. They are:
• Fixed Rate Mortgage: Interest rate with this mortgage option never changes during the tenure of the loan period. The monthly amount to be paid is fixed, generally spanning 15 to 30 years. Many homebuyers go with this repayment option since it offers stability during economic fluctuations.
• Adjustable Rate Mortgage: Interest rate under this repayment option varies with fluctuations in the market rate. In the first year, rate of interest is fixed 2 points below the market rate. Usually, the rate for the first year is also called the teaser rate. The yearly fluctuations are limited to 1% or 2% points, but the frequency of fluctuations varies. This is an option that people entertain if you live in a home less than 5 years. VA Hybrid Adjustable Mortgage and Equity Mortgage are variations of this repayment option.
With fixed mortgage VA loan rate options, home buyers know the exact amount to be repaid every month for 15-30 years, while the ARM option has rising interest rates that may create financial strain on your budget every month. But the advantage with ARM is that the interest rates are lower, which helps borrowers keep more of their money. With fixed rate mortgages, the homebuyer has to pay a more for the predictability.
It is never easy to decide the best option, as each one has its advantages and disadvantages. VA Loan Captain can help you make the best choice while helping you get loans at competitive interest rates. For more information on current mortgage rates on a VA loan, please visit: www.valoancaptain.com.