Active-duty, looking for a logic check from the hive mind.
I’m considering a VA ARM (likely 5/1) instead of a VA fixed because my expected timeline at this duty station is ~2–4 years. The lower initial rate would help cash flow in the near term.
Current plan:
• Buy using a VA ARM
• Occupy as primary residence (intent to occupy)
• PCS before the adjustment period
• Refinance into a VA fixed-rate loan around/after PCS, or sell
• Possibly rent it out long-term if the post-refi numbers still work
My understanding:
• VA ARMs have strong caps (1% per adjustment, 5% lifetime)
• Renting after PCS is allowed under VA rules
• Refinancing from a VA ARM to a VA fixed is permitted if the loan qualifies
• This only works if the payment is still survivable if rates move before refi
I know ARMs are usually discouraged here, but for a known short hold with a planned refi, this seems like a reasonable risk tradeoff.
What am I missing?
• Refi timing risks?
• PCS-related occupancy issues?
• Anything VA-specific that makes this a bad idea in practice?
VA ARM for short PCS — does this logic make sense?
byu/Megadeth923 inMilitaryFinance
Posted by Megadeth923
1 Comment
What are you seeing on the difference between an ARM and a fixed because recently the difference hasn’t been dramatic enough to do them. I for one, like ARMs but they have to make a significant difference compared to a fixed on rate/costs or the juice isn’t worth the squeeze.