If you are looking to buy or refinance a home, you will need to contemplate your loan options. Although some people watch the market to try and borrow when rates are low, many overlook one important quality that could help them save big: being an active-duty member of the U.S. military or a veteran. If you are or were a member of the armed forces, then you’re in luck. Interest rates for VA loans are amongst the lowest on the market (for the full eligibility requirements for VA loans, please click here). Plus, VA loans offer a host of other benefits. Once you see how the interest rates for VA loans compare to other mortgages, you might wonder why you haven’t looked into them sooner!
Interest Rates for VA Loans
When deciding what type of loan to take out, many people focus on interest rates – and for good reason! “Even saving a fraction of a percent on your interest rate can save you thousands of dollars over the life of your loan” (source)!
Although many service members and veterans don’t realize it, interest rates for VA loans are amongst the lowest by a pretty sizeable amount – 0.33%, to be exact. According to Ellie Mae, in August 2017, the average loan rates were as follows:
- Conventional: 4.34%
- FHA: 4.25%
- VA: 4.01%
Plus, low interest rates are not the only boon offered by VA loans. The VA mortgage is one of only two major loan programs that do not require a down payment. Instead, first-time loan borrowers who take out a VA loan pay a 2.15% one-time funding fee, which can save them a considerable amount of money. Beyond that, the VA loan program allows you to put that fee into the money you’re borrowing for your loan if you’d prefer (you’ll pay interest rates on the funding fee if you choose to do this). What’s more, if you are a surviving spouse or a disabled veteran, the funding fee is typically waived.
VA Loan Myths
With such low interest rates and no down payment, you may be wondering why more qualified homebuyers aren’t using VA loans. Many assume there must be a catch – that you must have to jump through hoops or meet nearly impossible criteria to qualify. However, the myths behind VA loans are exactly that – myths. So if you want to take advantage of the low interest rates for VA loans, don’t be put off by the following myths:
You Need a Perfect Credit Score
The myth that a borrower needs a perfect credit score to qualify for a VA loan sometimes scares people away. In fact, this is completely false. There isn’t a minimum credit score requirement for VA loans; it varies from lender to lender. While the perfect FICO credit score is 850, most VA loan lenders require their borrowers to have a 620 credit score (source).
VA Loans Take a Long Time to Close
When choosing which loan you want to take out, the last thing you want is for it to take a long time to close. While many people think a VA loan takes longer to close than a conventional loan, this myth is simply not true. If you are borrowing through a lender who specializes in VA home loans, then closing will typically happen within 30 days. The key is to make sure you find a reputable and trustworthy VA loan lender.
VA Loans Are Risky
Because VA loans don’t require a down payment, many who look into this option assume it’s much riskier. However, in recent years, VA loans have actually had some of the lowest foreclosure rates compared to other mortgage types, due to the Loan Guaranty Service’s dedication to helping veterans keep their homes.
Do you want to take advantage of the low interest rates for VA loans? Buying or refinancing your home will be a breeze with the help of a VA loan specialist. At PrimeLending: Manhattan, Kansas, our knowledgeable team members are here to provide you with only the highest expertise, dedication, and care. Helping thousands of veterans and active-duty members every year, we would be honored to assist you with your VA loan. For questions or more information, call 785-560-3011 or leave us a message. It’s our turn to serve you!