Download - The VA Hybrid Loan and the CMT Index
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The VA Hybrid Arm and the
CMT Index.
Simplifying a very complex topic.
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What does it mean to
Simplify?
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What parts make up the
VA hybrid Arm loan?• Start Rate
• Margin
• Index
• Caps
• Fully indexed rate
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What parts make up the
VA hybrid Arm loan?
• Start Rate
Also know as the NOTE Rate
Rate on your ORIGINAL NOTE AT CLOSING
Today our most popular start rate is 2.25%
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What parts make up the
VA hybrid Arm loan?
• Margin
The “space” between two things
(note rate and the index) upcoming slides
At Low VA Rates we focus on
LOW MARGINS and today it is 2%
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What parts make up the
VA hybrid Arm loan?
• IndexAn Index is a measurement of the value of a
Section of the market. It is a tool used by
Investors to describe the market at a given time
VA Loans use the CMT Index. 1 year constant
Maturity Treasure
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What parts make up the
VA hybrid Arm loan?
• CAPS (1-1-5)Rules in place on each ARM loan that determine
how often and how high or low your rate can go
At Low VA Rates we primarily offer 1-1-5 Caps
1% a year-rate will never go up or down more than 1%
1 time a year-rate can only change once a year
5% lifetime- nor matter what cannot go up more than this from the
START RATE
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What parts make up the
VA hybrid Arm loan?
• Fully Indexed Rate
Each time your rate adjusts, the final rate it remains at for the next year
Simple math really. Index + Margin = Fully Indexed Rate
Today the CMT index is .11 our margin is 2% so your fully indexed rate is 2.11%
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What is the most
important part(s)?
• MARGIN & INDEX
Lower the Margin the lower your rates once they start to adjust
Lower your index and more stable the index then lower your rate and less moves
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Real Life Example
• MARGIN & INDEX
We offer a 2.25% VA hybrid arm and some competitors offer 1.75%
(we can offer the 1.75% too, but suggest a closer look)
Our 2.25% arm has a margin of 2% our competitor(s) has a 2.25% margin
After year 3 if the CMT is at .1 we would have a fully indexed rate of 2.1% and
Our competitor would be at 2.35%
After the fixed period the loan with the lower margin will ALWAYS BE LOWER
Our 2.25% arm has lower fees than our competitor(s) 1.75% also
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– Charles H.
"I recently refinanced my VA loan through Jed. He
was very responsive and gave thorough and
honest answers to my many questions. I would
definitely work with Jed again in the future."
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Thank you, We hope this was
informative and useful.