VA Loan Choices
VA loans do have a variety of features and benefits for those who qualify from no money down to easier qualifying and yet with all of the inherent advantages in the program, the borrowers still have a variety of loan types from which to decide, making the program even more attractive. What types of VA loans are available?
Fixed rate loans, mortgage programs where the rate never changes throughout the life of the loan are the most popular choice today, especially in light of the current interest rate environment. The common perception is that VA fixed rate loans are in the 15 and 30 year fixed variety, but lenders can offer the borrower fixed rate terms in five year increments including 10, 15, 20, 25 and 30 year mortgages. The longer the loan term, the lower the payment. The shorter the loan term, the higher the payment but requires less interest over the life of the loan.
Adjustable rate mortgages, or ARMs are also a choice. ARMs are typically issued where the interest rate can change once per year, based upon a predetermined index plus a margin. A common index is the 1-year LIBOR and a typical margin is 2.25. If the LIBOR today is .75 and the margin is 2.25, then the new rate would be 2.25 + .75 = 3.00 percent.
Another form of an ARM is a hybrid, where the initial rate is fixed for a predetermined period such as 3, 5, 7 or 10 years before turning in to a one year ARM. These programs are identified as 3/1, 5/1, 7/1 and 10/1.
There are different reasons to choose any type of loan program and term but VA loans do offer a considerable range from which to choose. Contact your VA loan officer and discuss your various options to find the perfect VA loan program.
