looking for advice on VA Hybrid loans
I am looking at a VA hybrid. 3:1. Initial rate is 1.75% for 3 years. it can flex one time per year and never more than 1% a year and no more than 5% from the original rate at any point in time. Amortization is recalculated at every rate adjustment.
This allows me to make a huge dent in the principle of the loan over that first 3 years (about 25K if I maintain my current payment).
looking at the worst case scenario if over 8 years it grew 1 percent every year to 6.75% my payment would be about 50 bucks more than my current payment since it has a new amortization every year and the principle is lower. Thoughts? For reference amount after refi is 190K and 1.75% for a 939 per month payment. Current rate is a fixed 3.25
thoughts? (all numbers are approximate)