VA Loan Rates

VA Loan Rates

Get The Right Rate For Your VA Home Loan

One thing that veterans and active service members must always keep in mind about VA Home Loans is that the VA itself does not actually give out the loans. It is much like the Medicare system where private insurance companies are authorized to sell health insurance at rates outlined by the federal government. The VA Home Loan program has a network of authorized lenders who follow the guidelines, but they are allowed to market the loans any way they want.

A veteran looking for a VA Home Loan needs to understand what interest rates are and how the fluctuation in interest rates can affect their loan. Adjustable rate mortgages tend to be unpredictable and the borrower may notice their monthly payments slowly rising as the adjustable rates are pushed higher and higher.

Fixed rate mortgages are convenient because the payment is the same every month. The one thing about fixed rate mortgages is that when the mortgage interest rates drop, you do not see any changes in your mortgage payment. But many people like the stability of the fixed rate mortgage versus the unpredictability of the adjustable rate loan. A VA Home Loan can be either fixed rate or adjustable, depending on what the borrower can get approved for.

The way the VA Home Loan process works is that the veteran or active service member gets his Certificate of Eligibility from the VA and then the VA will let the service member know how much of a loan the program will cover. If the VA Home Loan program approves a member for a $100,000 mortgage, then he can get his $100,000 mortgage without having to use a down payment. However, if he wants a $125,000 home, then he will need to put up the additional $25,000 out of his own pocket.

That amount that the VA approves is just for the purchase price of the home or property. The veteran still has to negotiate an interest rate and term for the actual mortgage. Once the veteran and the lender agree to a term, then the VA will back the amount and the loan is signed. But in the meantime, the lender can change the interest rate depending on the situation.

When you are shopping for a mortgage, you may notice that you see something called an APR and then a note rate. The note rate is the interest rate charged on the financed amount without any extra service charges added in. The APR, also called the Annual Percentage Rate, is the actually cost of the mortgage including interest and all fees. It is something that all lenders must reveal by law to protect borrowers from getting hit with expensive hidden fees.

As you get closer to getting your entitlement amount from the VA, which is the amount of a loan that the VA will back, you will want to start negotiating with VA authorized lenders for the terms of your loan. When you are negotiating a mortgage, there will be a period of time where the lender will agree to lock in the interest rate and wait for your VA entitlement to clear and for the seller to accept your bid.

The longer the lock-in period, the higher the interest rate. This is a common practice among lenders and it is something that VA Home Loan borrowers need to be aware of. The key is to get all of your VA paperwork in order and maybe even have a house in mind with an agreeable seller before getting pre-approved for your VA Home Loan. The less time that the bank has to wait for you to close, the less expensive your loan will be for you.

As you hunt down the lender you want to use for your VA Home Loan, remember that there are many things which affect interest rates. Inflation is one of the biggest factors that drives interest rates, along with the movements made by the Federal Reserve. In many instances, the actions of the Federal Reserve are tied directly to the rate of inflation. The Federal Reserve will often lower the prime lending rate to try and slow down inflation. If you were ever looking for the perfect time to get a VA Home Loan, it would be right after the Federal Reserve lowers the prime lending rate.

The higher your interest rate, the more your loan will cost you. The VA can only help you with the purchase price of your home. When it comes to getting a good interest rate, that is something that you will have to negotiate with your lender.