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VA Streamline Refinance using an ARM (gasp!)
June 26th, 2009 | 
Author: VA Streamline Refinances are such a great deal, I did one myself and I had a great interest rate. My interest rate for a 30 year fixed on my VA loan was 5.5% so you might ask how I could improve on this to make it worth while to refinance. The answer is simple, I went to an adjustable rate mortgage.
Now before you get out the burning fire brands and hold up the silver cross, let me explain a few things:
- Government adjustable rate mortgages are different than most of the conventional (non government) ARMs. For one thing, they only adjust a maximum of 1 percent per adjustment period. Also, the margin (the amount you add to the index to determine the interest rate) is quite low. Right now, if my rate were to adjust, it would be very minimal and I have an extremely low start rate.
- I have a plan for the length of time I am going to be in my home. For me, it is not the right to sell even though I could move into a much smaller place than I have. So, a 5 year ARM is ideal for me. That will give me time for the market to correct…..after all, the Real Estate market always comes back.
- I will be saving over $250 a month during that 5 year period, money I have already started to put to good use by replacing my flooring with a nice bright maple laminate.
- I also got to skip a payment so it put a little extra summer money in my pocket (until I pay for the laminate.)
Adjustable Rate Mortgages are not for everyone, but they are the right choice for some. If you are only going to be in a home for 5 years, why not a 5 year ARM? Even if you are in the home for 6 years, the adjustment on the 5th year is still a lower overall interest payment than you would get for a 30 year fixed rate mortgage. Call me at the number below if you would like to talk specifics.
Additionally, I got a nice letter from the Department of Veterans Affairs saying they had guaranteed my loan and listed my rights and responsibilities. Guess what, I am responsible for making my payments! They also told me that if I have any difficulty, I should contact the lender or the VA office for assistance. VA also operates a website to answer questions and give assistance, you can access it here. If you have questions about VA loans or a VA Interest Rate Reduction Refinance Loan (IRRRL0 specifically, give me a call at 541-342-7576/541-221-3455 Cell or send me an e-mail, eugeneloanguy@gmail.com .
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Fred Chamberlin
Fred, the ARM loan is a beast of a different color. With that said, it is a beast that can be tamed.
The type of loan you get is really a very personal decision. What might be the right loan for a young, single professional might not be what is right for an older couple getting ready to put a kid through college. While I don’t think that mortgage professionals should steer consumers to increase profits or anything of that nature, I do think that presenting the different options available is important. Different programs obviously have different advantages and weaknesses but the consumer should be the one to decide what is right for them. It would be nice to think there is a “best” loan out there but that would only work if we were all clones with the same needs and goals. That said, I can definitely see where an adjustable VA loan might be right for some people.