The VA streamline loan is a very popular refinance for Veterans right now. This is basically a refinance that allows Veterans to refinance their current VA loan without having to jump through all of the hoops that they had to do when they got their current VA loan.

Some of the benefits of the VA streamline loan include:

•No appraisal

•No income verification

•No minimum credit score

•Possible defer or not have to make the next two month’s mortgage payments.

•Possibly get an escrow refund of all of the money that is in the escrow account with your current lender when the loan is paid off.

It is important to remember that the rules for the VA streamline loan are set forth by the VA, but each individual lender has the ability to put their own “lender overlays” in place. That basically means that they the lender can require an appraisal if they want or can require a certain credit score. The VA is guaranteeing the loan, not actually lending the money. The bank that is actually lending the money has the right to make sure they are lending based on what they feel comfortable with.

The VA Hybrid loan is being used on a majority of VA refinances right now. This Hybrid loan is just what it sounds like…a Hybrid. The VA took the best of the fixed rate loans and the best of the adjustable rate loans (contrary to what the news will have you think, there are many advantages to an adjustable mortgage) and created the VA Hybrid loan.

Through studies and statistics the VA noticed that the inherent nature of the military lifestyle requires Veterans to move frequently. A 30yr fixed rate mortgage was not the right answer for most of the Veterans that knew they would not be keeping that home for 30 years. On the other hand, the standard adjustable rate mortgage had some risks that the VA was not willing to back or guarantee.

The Hybrid loan is fixed and guaranteed for a set time from (3 or 5 years). After that initial period, the loan can start to adjust but only every 12 months. Most of the sub-prime loans that you hear about in the news that caused the “mortgage meltdown” were adjusting every 1, 3, or 6 months. They also didn’t have caps on each adjustment. The VA Hybrid can only adjust a max of 1% up or down per year. It is also tied to the 1yr CMT which is a very slow moving index.

What does all of this mean? Basically, Veterans who need to maximize monthly savings have the ability to save much more with this loan. The VA Hybrid loan typically has an initial start rate of 1-2% lower than the going 30yr fixed rate. This can amount to an extra $100-$200/months savings.

If you are looking into a VA streamline refinance, do yourself a favor and take a open minded look at the VA Hybrid loan.