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Helping our military veterans find their dream home in Maryland

By: 1RATE / 18 May 2022

How to get the right VA loan rate for your home purchase

Serving in the military is one of the most humbling and rewarding experiences that many men and women have the opportunity to have. There are several advantages to serving in the armed forces, one of which is the availability of VA loans.

It's a mortgage that's been backed up by the US Department of Veterans Affairs (VA).

Issued by private lenders and available to active duty military, veterans, qualified spouses, and certain disabled veterans who have a service-connected disability, VA loans offer a number of benefits not offered with conventional home loan products, including:

  • No down payment
  • No mortgage insurance
  • Lower interest rates

While being in the military makes you eligible to get a loan, there are still things you need to do and step you need to take to make sure you can get the best mortgage rate. Even in the military, you are not guaranteed the best rates.

Let's get started…

Know Your Credit Score

While the VA is much more lenient on borrowers when it comes to loan qualifications like your credit score, knowing your score is essential because it can affect which lenders you can go to.

For those who need a refresher, It is a number that lenders use to figure out how risky it would be to lend money to you. It's based on information in your credit report.

It is calculated by assigning points for various factors such as:

  • Type of debt 
  • Length of credit history
  • Whether you pay your bills on time
  • Whether you have any past-due payments or public records (like bankruptcy)
  • How much debt you have compared with what assets you have (your debt-to-income ratio).

Obviously, the better credit and less debt you have greatly increase your chances of getting the best deals and offers from lenders! A good score range to aim for is 700-750. Anything below that may bring you some difficulties when you start your search. 

There are three main credit bureaus that collect and share information about your credit history they are: Equifax, Experian, and TransUnion. You request a free annual credit report to see where you stand.

While the VA does not require a minimum credit score, some VA loan lenders do. Consider checking your credit record before submitting an application for financing. Any questionable entries in your report may either be removed by a credit repair firm or by yourself.

Be curious and ask questions

Other steps you can take to ensure you get the best offer are as follows:

  1. Find quotes from different VA lenders
    1. The cost of a VA loan can vary widely because of the wide range of prices, costs, and products offered by different lenders. To prevent spending too much, get quotes from different lenders (between 3-5). Get loan estimates from potential lenders and compare the interest rate and annual percentage rate (APR). When it comes to the annual percentage rate, which includes interest and other fees, the two are very different. Consider these costs while comparing APRs.

      Inquire about closing costs and lender fees, including charges for credit checks, flood certificates, and appraisals. These fees may be reduced or eliminated entirely by some lenders.

      Your time served in the military, down payment (whether you opt to put one or not), and any prior loans you may have taken out are all elements that go into the VA loan funding fee, which is non-negotiable. The overall cost rises if the fee is included into the mortgage rather than paid up front.
  2. Think about giving a down payment
    1. You can acquire a VA loan without a down payment, but if you can put down at least give 5%, you just might end up lowering the amount you end up paying whether it's 15 or even 30 years. 

      If you've had difficulty saving for a down payment on your own, figuring out your debt to income can help get in the right direction!
  3. Choose the right loan for your needs
    1. Purchase, refinancing, and Native American Direct Loans for veterans (NADL) are all options available through the VA program. Within these options, there are more choices. As an example, a VA purchase loan can be obtained as a either a fixed rate or adjustable rate.

      A purchase loan allow to buy a primary residence (maybe your first home), make improvements to your current home, or buy land to build a brand new house. As you can imagine, a refinance loan is meant to lower your interest, shorten the loan length or even go from variable to fixed rate. Similar to purchase loans NADL is granted to native American vets or vets with native American spouses allowing them to own, construct, or renovate on federal trust land.

Bottom line is as a veteran you have access to some great resources that can give you an advantage in the market, just be sure to do your research before you make a final decision!

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