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Common Myths and Misconceptions About the VA Hybrid Loan

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This deck answers all your questions about the VA Hybrid loan and why it can be the best loan you may need.

Published in: Real Estate
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Common Myths and Misconceptions About the VA Hybrid Loan

  1. 1. Common Myths/Misconceptions About the VA Hybrid Arm Loan Helping you better understand the truth about VA hybrid arm loans
  2. 2. Lies and Misconceptions • My payment will go up when my rate starts to go up. This is a LIE, it can go down! We will go over real life examples • My rate will for sure go up. Another lie. Again, statistics and history prove that rates will go down too. I will show you. • If I want to pay my house off faster then I should use a fixed rate loan or shorter term like a 15 yr. Not even close to the truth. • A 30 yr fixed rate is safer and better for someone to forecast or plan for the future. This is the biggest of all lies perpetrated by the US banking and mortgage industry
  3. 3. Lie #1 - My payment will go up when my rate starts to go up • A $250,000 30 yr fixed rate at 4.5. Monthly payment is $1174 (PI only) • A $250,000 hybrid loan at 2.25% has a payment of $955 (PI only) for the first 36 months • Assume at the end of 3 yrs the rate goes to 3.25% • Next 12 payments will still only be $1009 • Still saving over $165 a month over your original payments
  4. 4. Lie #1 - Continued Possible scenario for the next 3 yrs Year 3 3.25% $1075 per month $99 less Year 4 3.5% $1106 per month $68 less Year 5 4% $1166 per month $8 less Balance owing will be $220,500 on the Hybrid Arm Balance on the same $250,000 loan at the 4.5% rate has a balance of $227,900
  5. 5. Lie #2 – My Rate Will For Sure Go Up • The index for the VA hybrid loan is the 1 yr CMT • From 2001-2011 the following occurred: • Over that 10 yr period • down, down, down, up, up, up, down, down, down, down • Remember what we learned in lie #1- even if rates go up that does not mean your payment will • We will cover some protections at the end
  6. 6. Lie #3 – You Can Pay Your Loan Off Faster With a 30 yr Rate • Go back to Lie #1 example of a 4.5% 30 yr fixed rate loan and your balance pays down like this: • We make the following assumptions with interest rates: up 1%, up .25%, up .5%, up .75%, up .25%, up .5%, up .25%
  7. 7. Lie #3 in More Detail • You can now see that a VA hybrid arm loan can allow you to pay your home loan down faster if done correctly • Why can it pay your home down faster? It is re-amortized every year at the lower balance. 30 yr fixed rates calculate your payment one time on day one at the original balance • For those that save the money from the lower interest rates/lower payments and apply that savings to their balance, they COULD PAY down an additional $25,000 in the first 10 yrs • A 30 yr fixed rate is safer and better for someone to forecast or plan for the future. This is the biggest of all lies perpetrated by the US banking and mortgage industry
  8. 8. Lie #4 – A 30 yr Loan is Safer and Better • One of the largest lies orchestrated by Wall Street and the money hungry bankers who want our money • USA is one of the only industrialized or developed nations that feeds its people this junk. We were the worst hit by the financial crisis and mortgage meltdown too • Why would you want to borrow money for 30 yrs? Not a single person watching this video will pay on their mortgage for the next 30 yrs, let alone 10 • Time to wake up America. What do the bankers and developers use?
  9. 9. Lie #4 – Facts and Protection • VA has both 3 yr and 5 yr hybrid arms that are fixed for 3-5 years. Fannie and Freddie data prove we change loans every 4-6 yrs • Rate can never increase more than 1% per year. THIS PROTECTS YOU from wild rate movements • Rate can never go up more than 5% from the start. Now you can forecast a worse case scenario • Time to wake up America. What do the bankers and developers use? • We do not cover this in today’s video, but you can take the THOUSANDS in saved interest and attack your high interest rate credit cards and literally save hundreds of thousands in interest by paying off your revolving credit card debt
  10. 10. “Great customer service and follow through! I would highly recommend them to handle your mortgage needs.” – George G.
  11. 11. Thank you for watching.

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