VA Loan Rates Today
Today’s VA loan rates are, in a word, low. Considering that mortgage interest rates were hovering around 8% in the early 2000s, today’s rates are rock-bottom.
So Why are Today’s VA Rates so Low?
Many factors influence mortgage interest rates. But generally, when the economy is struggling, rates are low. As the economy recovers, mortgage rates get higher.
While the U.S. economy is slowly improving, job growth is still slow. Until people can find good jobs, the economy will stay sluggish and rates will most likely stay low.
How do Low Rates Save me Money Each Month?
Homeowners who already have a VA loan can use a VA streamline refinance to take advantage of today’s VA rates. The VA streamline, also called an IRRRL, does not require as much documentation as a traditional refinance. No tax returns, W2s or bank statements are required. And credit score requirements are lenient.
Veterans and service members who want to buy a home also benefit. Low VA rates make homeownership more affordable. Many homebuyers discover buying a home is cheaper than renting and actually save money each month by buying a home with their VA home loan benefit.
What or Who Decides Mortgage Rates?
Contrary to popular belief, the Federal Reserve does not set VA mortgage rates or other mortgage rates. Rather, rates go up and down based on investor actions, much like the fluctuations of the stock market.
Here’s why: mortgages are re-sold to investors after the bank lends to home buyers. That gives the bank money to keep lending. And, it gives investors a fairly stable return on their investment. The investor’s return is the interest rate you pay on your mortgage.
When the economy is bad, investors tend to accept lower interest rates on mortgage investments, because they are historically a safe thing to invest in.
If investors can make more on the stock market, and do it safely, they will put their money there. When that happens, mortgage rates must be higher so that investors will purchase mortgage notes rather than putting all their money in stocks.
As mentioned before, when the economy is slow, one of the best investments is mortgage notes. It’s a safe, reliable place for investors to put money while the economy recovers.
But I Heard the Federal Reserve was Keeping Rates Low
The Fed is keeping rates low, but indirectly. They are currently investing billions of dollars buying mortgage notes. This places more demand on mortgage-related investments, which keeps rates on VA mortgages and other mortgage types low.
At the end of the day, it’s investors who are actually keeping rates low, though they are being influenced by Fed policy.
The Borrower Affects the Rate Too
A big factor that affects rates is you, the borrower.
Two borrowers buying the exact same house can have different VA rates. Why? Because they have different credit scores. Lenders will charge higher interest rates to borrowers with lower scores.
VA loan rates don’t vary as widely based on credit score as conventional loans. Still, if you have a low credit score, expect to pay a little higher VA mortgage rate.
How are VA rates compared to other types of mortgage rates?
VA loan rates are some of the lowest available compared to other loan types. Conventional and FHA rates and APRs are typically higher.
The reason is that VA mortgages have the lowest rate of default of the major types of home loans. Additionally, the federal government insures the mortgage, so that lenders are paid back if the borrower defaults. Because of these factors, banks are willing to issue VA loans at lower rates.
OK, Let me See Today’s VA Rates
No problem. All you need to do to check today’s low rates is complete a form that will take you about one minute.
What happens next? We’ll contact you either by phone or email, take down some information, and get you an accurate rate quote.
Why do we want to give you a personalized quote? Every person’s situation is different. That’s why average rates or general rates you see online aren’t usually accurate for you. With our process, we can give you a truly accurate rate quote, quickly, and with no obligation.