Who Has the Lowest VA Mortgage Rates?
VA loans typically have extremely low interest rates compared to other types of mortgages. So do you still need to search for the lowest VA mortgage rates? Absolutely!
A comparison purchase for your mortgage can save you many thousands of dollars, according to a federal regulator. And these days, getting quotes from multiple lenders can be quick and easy.
If you want to find the lowest VA mortgage rate and save on your home loan, here are the steps to take.
Start Shopping VA Mortgage Interest (January 19, 2022)
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Average prices compared to your price
It's true that, on average, VA mortgage rates are lower than most other types of loans. But average rates are only useful for "average" borrowers — and you might not be.
For example, your credit score may be higher or lower than most others. Or you could owe more or less than average on existing debt. Or maybe you want to pay a deposit even though you don't have to.
All of these (and other things) can affect your borrowing options and mortgage rate. And you'll find your best mortgage deal with a lender who's happy to work with a borrower like you.
6 Tips to find the lowest VA mortgage rates
1. Look around
As we've said before, shopping between lenders can be the best route to the lowest VA mortgage rates. But how many lenders should you target?
Freddie Mac (a big name in the mortgage industry) did some research to find out. And it reported:
"Our research shows that borrowers could save an average of $1,500 over the life of the loan by obtaining one additional interest rate quote, and an average of about $3,000 for five quotes." -Freddie Mac
These averages were for traditional loans. And when it comes to government-backed VA mortgages, there may be a smaller difference between lenders. However, getting quotes from just three to five lenders can save you a significant amount of money over the life of your loan.
Not sure how to compare mortgage quotes (aka loan estimates)? Find out everything you need to know: How to find mortgage rates and compare offers
2. Don't automatically stick with a trusted lender
You could refinance an existing VA loan or borrow again to buy another home. And you can be very happy with your existing lender. But that doesn't mean you should skip comparison shopping for two reasons:
Your finances may have changed – Suppose things have gotten easier since you bought your house and your credit score is now higher. Or times were hard and it fell. A different score (or some other factor that makes up your borrower profile) may mean that your existing lender is no longer the best for youYour lender may have changed – Most lenders go through phases where they are more or less competitive. Sometimes the mortgage market has changed. Or has its own business model. There are many things that can result in the lender who was the best last time not being the best
Of course, you should still ask your existing lender for a quote. But only stick with it if it offers the best deal compared to your other offerings.
Start Shopping VA Mortgage Interest (January 19, 2022)
3. Be careful with recommendations
You may have a buddy with a VA loan who thinks their lender is the best possible. Be sure to ask that lender for a quote. But ask many others too.
As mentioned earlier, your personal finances have a big impact on your mortgage rates. And these can be very different from the person who recommends a lender to you. So the company that made their best offer may not be your best.
An offer is only an estimate. It's not set in stone.
You can always call lenders to try and lower your rate or borrowing costs. And don't hesitate to let lenders compete with each other: “I would like to work with your company, but lender x sent me a loan proposal with a lower interest rate. Would you please agree?”
Or maybe the interest rates are the same but you have higher borrowing costs. You may be able to get your favorite lender to lower their fees.
According to Jon Meyer, loan expert and licensed MLO of The Mortgage Reports, closing costs are "the best thing to negotiate, while rates can be a bit more difficult."
Again, negotiate the best deal by using the offers of other lenders as leverage. And keep using that leverage until you're sure you can't get any more savings.
6. Get your finances in shape
You're more likely to get a better deal than usual if you work on your finances in the months before applying for a mortgage or refinancing. You can make yourself a more attractive borrower and earn a lower interest rate by:
Increase your creditworthiness – Read This is how you quickly increase your credit ratingReduction of your existing debt – Do whatever you can to reduce your debt load, especially credit or debit card balances. And don't take on any new debt or credit cards before finalizing your home loanIncrease your savings – Lenders like borrowers who have emergency fundsStick to your current job – Changing jobs before graduation can affect your eligibility and jeopardize your mortgage approval
It is unlikely that you can do all of these at the same time. But sometimes it's amazing how small improvements can lower the mortgage rate you have to pay.
What to Look for in a VA Lender
Obviously the first thing you will be looking for is the best overall deal. And that means low mortgage rates and low closing costs.
How you balance these depends on your circumstances.
If you're short on cash, you might be willing to pay a slightly higher mortgage rate and keep your closing costs low. But if you have a lot of money, you might not care about closing costs and can focus on the long-term savings that a lower interest rate should bring.
Note that some lenders are stricter than others when it comes to lending criteria. We have found that VA lenders require credit scores as low as 550 and as high as 640. So if your score is a problem, exclude those with high credit thresholds.
But it's not all about dollars and cents. Because you also want a lender that is efficient and trustworthy.
After all, there is no point in getting a low rate if you end up losing your dream home because the lender was too slow and incompetent to deliver your loan on time.
So look at the lenders on your shortlist to see the average ratings their customers give them on online consumer rating sites. You can search for them on the Better Business Bureau website to find their BBB rating. Finally, perform another search of the Consumer Financial Protection Bureau's (CFPB) consumer complaints database.
A warning. Don't read too much into individual complaints. Any organization with a large number of customers inevitably alienates some. So focus on the numerical overview rather than the occasional bad experience.
Frequently asked questions about VA mortgage rates
Which Lender Has the Lowest VA Mortgage Rates?
That depends on your situation. The VA does not regulate mortgage rates; Rather, they are set by individual lenders. And each has its own rate-setting formula. So the only way to find the cheapest lender is to shop around and get multiple rate quotes.
Are VA interest rates lower than traditional ones?
Yes. For years, Ellie Mae (now ICE Mortgage Technology) has published a monthly Origination Insight Report showing that VA loans have consistently and significantly lower interest rates than traditional mortgages and FHA loans. That's one reason VA mortgages are typically the best choice for eligible veterans and service members.
Are there closing costs on a VA loan?
Yes. VA closing costs include lender fees, appraisal fees, rebate points, processing fees, and various third-party service fees. There's also a one-time VA finance fee that's technically due at closing, but most borrowers factor it into the loan amount so they don't have to pay upfront.
How do I shop for VA mortgage rates?
All you have to do is request quotes from multiple lenders. You can find lenders online with low advertised rates, ask friends for recommendations, and consult your bank, credit union, and/or existing mortgage company (if you have one). The more you get, the better chance you have of finding your lowest fare. It doesn't have to be long. And the hours you put in could be the best paid of your life.
Ready to Apply for a VA Loan?
Experts recommend getting at least five installment quotes to find the best deal. And if you can get more, it only improves your chances.
You can get started right here.
Show me today's prices (January 19, 2022)
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for the products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policies or position of Full Beaker, its officers, parent companies or affiliates.