Trying to figure out whether VA loan rates will go up or down can feel like a risky waiting game. While you can keep an eye on the market and try to strike when you think VA home loan rates will be at their lowest, your best bet is likely to speak with a mortgage lender.
While you can try to track down current VA loan rates and continue to check VA loan rates today in your search engine, there’s only so much variation that occurs, especially if you have a time limit between now and when you need to buy. There is no denying that 2020 has been a record year for low mortgage rates, but that is an anomaly based on the recession, not something that’s easily predicted and planned for.
To learn more about VA loan rates, how they’re determined, and what the variances are, read this post from start to finish. To find the answer to a specific question, use the links below to navigate.
As of the beginning of October 2020, mortgage rates are still trending downward. Keeping in mind that mortgage rates have hit all-time lows several times over the course of the year, it’s more important to look at overall trends than VA loan rates for today.
Even though you can check up on current VA loan rates regularly, this will only give you a general insight into the market, not necessarily the loan rate that you’ll qualify for. Since VA loan rates are highly individualized, personal financial factors, among other interest rate aspects, will significantly impact the rate you can qualify for.
There are a variety of financial aspects that are factored into determining VA interest rates. However, one thing to make clear is that the Department of Veteran Affairs does not set VA home loan rates, your lender does.
While individual mortgage lenders set VA interest rates, their decision to adjust VA home loan rates is usually dependent on the loan terms, the economy, supply and demand for mortgages, and individual financial factors.
The most influential aspect of interest rates is the market, which is impacted by factors such as job growth, national debt, and inflation. Interest rates, including those for VA loans, can fluctuate on a day-to-day basis due to the state of the economy.
Another factor that plays a role in VA home loan interest rates is the loan term, whether it’s a 30-year VA home loan or a 15-year VA home loan. Typically, shorter-term loans have lower interest rates, so 15-year VA loan rates would be lower than 30-year VA loan rates. However, since there are many factors that impact your VA home loan rate, this isn’t always the case.
Griffin Funding offers customized flexible terms to allow you to choose anyterm—from eight to 30 years—that fits your budget and allows you to potentially save thousands of dollars in interest. For example, let’s say that you refinanced two years ago at 3.25% and have 28 years left on your 30-year fixed loan. Rates have dropped enough for a refinance to benefit you but you don’t want to start all over again on a new 30-year term. In this case, you could just choose a 28-year fixed-rate loan.
Mortgages can either be fixed-rate loans or adjustable-rate loans. A fixed-rate mortgage has a set interest rate that remains the same over the course of your loan (15 or 30 years). An adjustable-rate mortgage is one where the interest rate is set for a period of five or seven years and is then adjusted up or down based on the current market conditions.
Generally speaking, adjustable-rate mortgages have a slightly lower interest rate in many cases.
There are several different types of VA loans, which may impact your interest rate. For example, the rates between purchase loans and refinance loans typically vary, and then there is further interest rate variance between the subtypes.
When it comes to your VA loan rate on an individual basis, it really comes down to your financial health, including your credit score and income. This is because your credit and borrowing history, as well as your ability to make your loan payments, determines how much risk you present to the lender.
The primary tactic that future borrowers employ when looking for the best VA loan rates is to compare different VA loan rate quotes from several lenders. However, this can be time-consuming and frustrating, given the nearly constant fluctuations of interest rates.
One of the easiest ways to find the best VA loan rates is to look into which lenders are known for offering competitive interest rates, like Griffin Funding.
Typically, VA loan rates are lower than other types of mortgages—a benefit that’s meant to reward veterans and current military members for their service.
Those with credit scores that are on the lower end of the spectrum typically do not fare well when it comes to qualifying for favorable terms with a conventional loan. In fact, they usually see much higher interest rates. While borrowers with lower credit scores would fare better with non-QM loans, VA home loans may still provide better interest rates. This, of course, only applies if you qualify for a VA home loan in the first place.
If you’re looking to purchase your first home, you may find yourself comparing a first-time-homebuyer loan vs. a VA loan. Generally, VA loans still have lower interest rates than first-time-buyer loans.
Another thing to consider when weighing your different loan options and their respective interest rates is the fact that there are restrictions on the condition of the home you can move into and VA occupancy rules you have to follow, so interest rates should not be the sole factor that you consider.
On the surface level, VA loan refinance rates may seem higher than purchase loan interest rates if you’re just comparing current VA loan rates across the board. However, the best way to look at them is by basing it off your current interest rate. You should also consider the goal of refinancing.
For example, if you’re looking to refinance your current VA home loan, a VA streamline refinance loan (also known as an interest rate reduction refinance loan or IRRRL) is going to give you a lower interest rate. On the other hand, a VA cash-out refinance loan is designed to free up the equity in your home by turning it into cash. In some cases, you may be able to get a lower interest rate, but not always.
When comparing the VA loan rates today, you may see that APR is higher than the standard interest rate. But why is that, and what is the difference between these rates?
First, let’s recap by answering, “what are VA loan rates?” VA home loan interest rates are solely the expression of how much interest you’re going to have to pay on your loan.
While APR (annual percentage rate) is also expressed as a percentage, it is very different from the interest rate. The APR on your home loan includes more than just the interest rate—it comprises the annual cost of the loan. This includes the other fees, such as closing costs, loan origination fees, broker fees, discount points, etc. Because APR consists of all of these cost factors, APR is higher than the interest rate you’ll see when comparing them.
APR may be a better way to compare the actual costs of different home loans because it gives you a comprehensive view of how much you’ll be paying on a yearly basis with that mortgage.
While there’s no standardized time of year that you can count on for VA loan rates, you may be able to save on your mortgage by waiting for the right time to buy a home. For example, you can save over the course of your loan by waiting until it’s a buyers’ market and house prices have gone down, which is usually Autumn and Winter, according to Nationwide.
You can also pay attention to forecasts for mortgage rates in order to get a better idea of when might be the best time to apply, but even then, that’s just speculation. There’s really no way to guarantee that you’ll strike when mortgage rates are going to be the lowest. Instead, the best strategy is to focus on your financial health and work with your lender to find the right home loan solution for you.
Stop speculating and find out what VA loan interest rate you qualify for. Submit an application online or call us at 855.651.2871 to speak with one of our loan specialists. At Griffin Funding, we work with you to help you find the best home loan option for your circumstances, so that you can get into the home of your dreams faster and cheaper.
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