Buying your dream home is one of the most exciting steps your family will take. As a veteran, you and your spouse have sacrificed everything for your country, even risked your life. We believe your kids deserve to grow up in a home they will remember for the rest of their lives. You and your spouse can relax on the spacious property you all can grow old on together.
VA Loans are the best loan for obtaining your dream home if you have served in the military or are active-duty. Like any large purchase, you should conduct extensive research and understand your options, which we will help with. Our team has the information you need to understand how to get your lowest rate before signing the dotted line.
What is a VA Loan?
VA Loans are home loans the Department of Veterans Affairs backs so you can purchase a home that is your primary residence. This does not mean the VA financially secures your loan, but they guarantee your payment through private lenders who offer VA Loan options. Their partnership allows lenders to offer loans with lower interest rates, no Private Mortgage Insurance (PMI), and no down payments. Closing costs, including the VA Funding Fee, will also be less.
You and other United States service members that meet specific branch and service duration requirements are eligible for VA Loans. Also, surviving spouses of veterans can also qualify for a VA-backed home loan. Veterans Affairs and your trusted VA lender will work with you toward homeownership no matter what your family dynamic looks like after military service.
Who sets VA Loan Rates?
Because the VA does not offer the loan directly, they are not the entity that establishes loan rates. Individual private lenders set their specific VA Loan interest rates, such as banks, mortgage companies, and credit unions. These percentages may change often and vary depending on current market conditions, eligibility, and other variables.
It is possible to get a mortgage rate quote lock with most companies and snag a favorable rate you see online. However, these percentages will come and go daily, so you need a trusted lender that can guarantee your lowest rate. They will help you navigate the adaptive housing market and promise a mortgage rate for about 30-60 days.
Are VA Loans better than conventional loans?
Many conventional loan options are available to all home buyers, but VA Loans are only available to you and other service members. They typically have lower interest rates than FHA loans and conventional loans for those who qualify. Veterans Affairs created this home loan program with your family in mind, unlike other traditional loans that anyone can apply for.
We recommend exploring VA Loan options in the least and comparing them to other loans you could get. Your lender can compare multiple loans types you qualify for if they specialize in more than just VA Loans and advise you on the wisest one.
Factors that affect VA Loan Rates:
Many factors will affect the interest rate you receive when seeking a VA loan through a private lender. These variables can increase or decrease your rate, adding tens of thousands of dollars in interest after a 15 or 30-year loan term. Therefore, we believe it is vital for you and your partner to understand these factors so you can start preparing now to live comfortably later in your family’s dream home.
Your credit rating is one of the most prominent factors that will affect your rate when applying for a VA Loan. Individual lenders set their requirements for credit score limits, but most want to see a score above 620. The higher your score, the better rate you will qualify for in most cases, but this is not a hard and fast rule. You may still be eligible if your number is below 620 since lenders consider more than just your credit score when giving you a mortgage rate.
Veterans Affairs offers credit consulting services you can take advantage of if your current credit score prevents you from getting an affordable rate. Also, your VA Lender personalizes your mortgage rate to your financial situation and can be a second party to advise you on ways to decrease your rate.
A down payment, or a percentage of the loan that you must pay upfront when securing a home loan, is required to purchase your dream home with traditional mortgages. This amount can be as high as 20% of your home’s value for conventional loans, while first-time homebuyers can get as low as 3.5%. Although VA Loans do not require a down payment for financial flexibility, your family can receive a lower interest rate if you have extra cash in hand.
This lack of down payment means that you, as the buyer, do not have to save up thousands of dollars to put down upfront to purchase a home. This reason alone is one of the biggest reasons many service members choose to secure a VA Loan and buy a home rather than spend years renting. However, if you can put a down payment on your home, your overall loan amount will decrease, and you can pay it off faster.
The terms of the loan you wish to secure will significantly affect the rate your lender gives you. These conditions include your loan’s duration and its type that a lender combines in your individual VA Loan package. Loans for 15-year periods may have higher payments but will call for lower interest rates than loans that last for 30 years.
Additionally, you can watch the housing market for significant mortgage rate changes and pursue refinancing for a lower percentage. We recommend looking into an Interest Rate Reduction Refinance Loan (IRRL) that are easier to secure with a VA Home Loan. You will also see online as a Rate Reduction Refinances that can decrease your monthly payment and audit your original loan terms under a new financial plan.
You and your spouse can also consider VA Cash-Out Refinance Loans, which allow you to borrow cash against your home’s equity for home improvements and emergencies. Both refinance options are available to you in partnership with your VA Loan and an experienced home lender can help you with all of them.
There is no income limit to be eligible for a VA Loan, but your lender will assess your debt-to-income ratio to determine the dollar amount they can lend you. They will compare your monthly income and monthly payments side-by-side and look for a ratio under 41%.
Although a lower DT makes you less of a borrowing risk for the lender, they will not necessarily disqualify you if your number is higher. The best VA Loan lenders will qualify or disqualify you on several factors rather than reject you on only one. They believe your financial situation is unique and will speak with you before making a decision.
The economy and housing market affect the interest rate your lender offers you when purchasing your spacious property. VA Mortgage Rates will be lower when the economy is thriving and vice versa. There is not much you can do as the buyer to decrease your mortgage interest rate if they rise due to a fluctuating market.
If rates are too high, the best option is to wait for a season when the market is less volatile. Or you can start working with a trusted home lender when interest rates are high, and they will help you time when to conduct a mortgage rate lock. VA Loans will have competitive interest rates while the economy shifts in general, so your family can have confidence knowing you are receiving the best deal.
Need Assistance Securing a Low VA Loan Rate?
We believe your family deserves to enjoy the American freedoms you all have sacrificed so much for. That’s why we recommend working with a trusted lender to obtain a VA Loan and discuss factors that affect your rate. Then you can start living in the spacious home your kids will grow up in sooner than you thought.
Our team has served veterans and active-duty military alike and would love to advise you on your VA Loan Journey. We will educate you on everything VA Loans, help you navigate the homebuying process, and land your family in the home you have always wanted. Give our VA Loan office a call at (602).908.5849, so we can take you and your partner toward homeownership.