Are 30 year fixed mortgages safe?

Are 30 year
fixed mortgages safe?
A simple guide to understanding how
a VA hybrid loan is safer long term
than a 30 year fixed rate.

Common Beliefs about
30 yr fixed loans
• Much safer than a hybrid arm loan
• Better for people wanting to pay off their loan
• Better for someone who wants to live in the
home for a long time or forever.
• Much easier for budgeting
• Much easier for someone on fixed income or
retirement

Common Beliefs about
the VA hybrid Loan
• Dangerous when compared to a fixed rate
• Only good for someone who does not want to
pay off the home
• Intended for someone who will be moving
soon or does not plan on being in the home
long term
• Very hard to plan or budget future payments
• Not good for someone planning to retire on a
fixed income

Lets compare and contrast the 30 year
fixed and the VA hybrid loan.
• Lets define “Safe” – Secure from danger or
harm. Affording Protection.
– Home owners want certainty.
– That their home is not going to fall down
– That they can afford the payments at anytime
– That they will keep the power, heat and lights on.
– Feeling “Safe” in your home is important.

Which loan is safer? Fixed or Hybrid
• Based on our experience when a Military
homeowner speak of safety pertaining to a
home loan he/she refers to the payment and
the ability to make that payment forever.
– Natural thought is that a 30 yr fixed rate will be
the safest, however when looked at in real life
scenarios, there are more times when a hybrid is
actually safer.

Why is the VA hybrid safer?
• Your payment is much MUCH lower.
– Allows you to pay your loan down faster
– Allows you to save money for those “rainy days”
– Allows you to pay off other HIGHER INTEREST debt
at a much faster rate.
– A 30 yr payment will still be $2500 20 years from
now! It doesn’t matter if your balance is only
$10,000, you will still pay what you were at
$350,000!

Which loan is better for paying off your home faster?
VA hybrid or 30 yr Fixed?
• First lets exam the facts. The USA is the only developed
nation that offers a 30 yr fixed rate in such abundance.
Why? Because almost NO ONE keeps the exact same loan
for 30 years.
• Do you know one single person that had the same loan for
30 years? NO YOU DON’T
• In order to completely pay off your home you will have to
do the following:
– Make additional PRINCIPLE payments
– Get a lump sum payment and pay your balance off all at once.
Insurance payout, lottery, inheritance
– You will not simply make the same payment year after year after
year until it is paid off. It WILL NOT HAPPEN!

Which loan is better for paying off your home faster?
VA hybrid or 30 yr Fixed? Continued
• Making additional principle payments is much easier
on a VA hybrid. If you can afford a $2500 fixed
payment, your VA hybrid payment could be as low as
$2000 which means you could afford to apply an extra
$500 a month to principle.
• VA hybrid loans due to their extremely low interest
rates will normally pay down your loan balance up to
$25,000-$35,000 faster in the first 5-7 years of the
loan.
• Getting an inheritance, lottery win or insurance payout
will not matter on what kind of loan you have.

Is the 30 yr fixed rate better for someone who wants to be in the
home forever?
• Again whether or not you will be in your home
forever is really not a valid question, the question
should be “will you be in your loan forever?”
• Based on the last slide it should be realized that
the VA hybrid loan will allow you to have lower
payments, pay down the balance faster, and put
extra money into your loan when wanted
• Whether or not you will retire and live in your
home forever is not contingent upon the loan
being fixed or hybrid.

Which loan is better for budgeting?
VA hybrid vs. 30 yr fixed
• 30 yr fixed payment will ONLY GO UP from day 1. If you borrower
$350,000 at 5.5% you will pay $1987 a month forever and your taxes and
insurance will make it higher.
• Even when balance is $50,000 you will still have to pay $1987 a month.
What about retirement fixed income, injuries, being laid off, getting a cut
in pay?
• A hybrid payment will be lower as your balance goes down even when the
interest rate goes up.
• For example you get the balance paid down to just $250,000 and rate hits
7% your payment will be $1766 a month. This is $221 LOWER than the 30
yr payment would be when the balance hits $250,000.
• WHY IS THIS?
– The hybrid loan is re-amortized each year off the new LOWER balance. A 30 yr
fixed loan is never re-amortized so it is calculating your payment always off of
the original balance.

Budgeting, Fixed Income and
Retirement
• Based on the last slide, it is obvious that the
VA hybrid loan is much safer for someone
looking to have a fixed income or moving into
retirement.
• Assume you know you will only be making $X
for the rest of your life. Can you afford to
know that your mortgage payment will be
going up almost every year?

Let the VA hybrid work for you!
Call and talk to us TOLL FREE at
866-569-8272

Are 30 year fixed mortgages safe?

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Are 30 year fixed mortgages safe?