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Shopping for Your VA Home Loan

The different VA Mortgage plans available for you

Understanding what VA mortgage and loan plans are is crucial to making the best of them. Many people do not realize what a VA loan really is, mistaking it for something that the VA offers to them. However, this is not the case here- the VA is there only as a guarantor for the loan. The rest is up to the lenders and institutions, which simply means that when you shop for mortgages, there is a lot that you can do and take note of in order to get a great deal. Continue reading to know some of the more important features of a VA mortgage.

Common types of VA mortgages

The Veterans Affairs loan guarantee is there for a variety of home repayment plans, which includes:

  • FRM or Fixed Rate Mortgage: In this payment plan, there is a constant rate of interest and you pay back in equal installments for the entire term. It is also known as fully amortizing, with terms ranging from 10 to 30-years. Generally, the shorter term you select, the lower is the associated interest rate.
  • ARM or Adjustable Rate Mortgage: In this, the start is with an interest rate lower than that in the present market, with potential increase or decrease during the life of the loan. For instance, in a one year ARM, the adjustment is limited to not more than 1% and a cap of 5% for the entire lifetime.
  • HARM or Hybrid adjustable rate mortgages: There is a fixed rate of interest for the first few years (typically 3), which is then followed by yearly adjustments. The yearly and lifetime caps in this are also fixed.
  • EEM or Energy Efficient Mortgages: This is a plan for those who wish to increase their loan amount later on in order to make some improvements to the home. The VA grants this as long as the improvements are ‘energy efficient’, with a cap of $6,000.

Some of the less uncommon kinds of VA loans include a VA Construction mortgage, Buy downs, GPM/Graduated Payment Mortgage and GEM/Growing Equity Mortgage. These are not that common as far as VA loans go, and will usually not be offered by lenders especially when the economy is weak.

Comparing and selecting mortgage plans

If you have a house in mind, then selecting the kind of mortgage that you want on it is what the next challenge is. First, whenever you get a quote that you are thinking of considering, you should make sure to get it in writing. This quote should include what is the rate and costs associated in getting the loan, along with all associated fee. You can also get a GFE or Good Faith Estimate wherein there is a legal obligation to honor the quote.

Next, you should try to get your quotes a little quickly, since the associated rates vary quite a bit on the global markets. Reviewing your quotes carefully helps you know what the best is for you. Lastly, you can also shop for VA mortgages online to do it faster and get more ways to afford your future home.

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