The VA hybrid loan, which is also known as a VA hybrid ARM, is a mortgage loan option that combines the stability of a fixed-rate mortgage and the savings opportunities of an adjustable-rate mortgage in a single loan. IRRRL stands for Interest Rate Refinancing Loan, also known as a simplified loan or a VA to VA loan. Every time interest rates change, payments will be recalculated based on what remains to be paid. That means that the interest and principal that make up your payment would balance out much faster than with a fixed mortgage loan.
To watch a full video presentation on the VA hybrid loan, scroll down the bottom half of this page. A hybrid has a fixed rate for an initial period, as short as three years before becoming a one-year ARM. hybrid loans, on the other hand, may offer a slightly lower initial rate compared to a fixed one before becoming an ARM. A hybrid loan is so called because it works both as a fixed-rate and an adjustable-rate loan.
This period of stability allows you to feel comfortable paying that new mortgage each month, and a great feature of the hybrid is that rates will start much lower in this case than with a full fixed-rate loan (they are usually the lowest with the 3-year option). The fixed period starts with each hybrid loan, but the amount of time varies depending on the type of loan you get. You can refinance or withdraw a hybrid VA loan quite easily if your current rates and conditions don't work for you or your situation. In fact, the VA places these covers, so you can be sure that the VA hybrid arm will be much safer and more stable than any other hybrid option out there.
Some potential homeowners may be torn between the two options, but with the VA hybrid loan, this decision is made much easier because you get the best of both worlds. More often, you'll see hybrid ARMs, which have fixed rates to start the loan and then adjust periodically after the fixed period. Today, the ARM program has gone from a six-month or one-year adjustable rate loan to the hybrid model.