01 Mar Common Questions Related to VA Mortgage Rates
Offered by the US Department of Veteran Affairs, a VA loan is a mortgage facility offered to current/former military members and their families. The VA does not set the mortgage rates for this loan; however, it ensures that these rates are competitively low and offer the most benefits to the beneficiaries. VA mortgage rates change on a daily basis, depending upon the market conditions and can range from somewhere between 2.6% to 2.9%. While applying for VA loans is quite an easy process, here’s the answer to some common questions asked by the applicants regarding VA mortgage rates.
Q1. Who determines the VA loan rates?
VA mortgage is a home loan service available to Veterans, active military members, selected spouses, family members, and survivors. Although it is offered and guaranteed by the department, the VA does not set VA mortgage rates. These VA loan rates are determined by VA-approved private lenders and depend upon the financial conditions of the beneficiary. However, the VA ensures that the rates are competitively low.
Q2. What factors can affect the loan rates?
VA loan rates are affected by the following factors-
- Financial Conditions
- Credit Score (600-620)
- Type of Loan (VA purchase, IRRRL, cash-out refinance)
- Loan Duration
- Market Conditions (inflation, job growth, mortgage market)
Q3. How low are VA mortgage rates as compared to conventional loans?
In November 2020, the average rate for a VA loan was 2.71%, while for a conventional loan it was 2.99%. While this does not seem like a major difference, it could add up to some considerable savings in the long run.
Q4. Do VA purchase rates differ from VA refinance rates?
VA purchase rates are always different from VA refinance loan rates.
For a refinance loan, the rate might depend upon the types of refinance loan, credit score, documentations and other factors.
Q5. What is the current VA mortgage rate in the market?
For a VA purchase loan, rates might range from 2.625% to 3.125%, while APR (Annual Percentage Rate) might range from 3.006% to 3.440%.
For VA IRRRL, mortgage rates range from 2.375% to 2.875%, with 2.795% APR.
In the case of cash-out refinance, mortgage rates go up to 2.990%, with a 3.255% APR.
Q6. What is APR?
APR is the total of your interest rates, closing costs and all other expenses associated with a mortgage.
Q7. What can I do to get a lower rate?
If you want to lower your interest rates, you can opt for an IRRRL refinance option. This facility will let you refinance the existing loan at a lower interest rate.
A better credit score, timely payments and financial stability can also get you lower interest rates.