VA Loan Rates
The rates that accompany your VA Loan depend on a variety of factors, including what type of loan you get, your credit history (for certain loans) and whether you choose to get a Joint VA Loan with your spouse. Our VA Loan company has dealt with countless VA Loan applications and our representatives have the experience to get you the best possible VA Loan rates on your loan.
After you qualify for a VA Loan, we will then help you determine what type of repayment plan you want. Your rate will be affected by the type of VA Loan repayment plan you choose. With five different choices, your decision should be based on such factors as how much you can pay up front, the reason for the loan, and the amount you can afford each month.
Repayment Options for VA Loans
- Fixed payment each month
- Adjustable rate mortgage (ARM)
- Hybrid adjustable rate mortgage (ARM)
- Growing equity mortgage (GEM); and the
- Graduated payments mortgage (GPM)
Lower Rates with Fixed VA Loans
With a fixed interest rate, the rate is determined at the time the loan is issued and cannot be changed by the lender nor the borrower. These plans typically offer a lower monthly interest rate. With conventional fixed repayment plans, there is often a penalty if the borrower wants to pay off the loan earlier, but with VA Loans there are no penalties for early repayment. Fixed repayments are ideal for VA Loan recipients that want the stability and peace of mind of a low set payment due each month.
Adjustable Rate Mortgages
Adjustable rate mortgages (ARMs) work by giving the lender the lender the ability to raise the mortgage amount each month. Therefore, the VA Loan rates can fluctuate and these are not ideal for VA Loan Holders who want a guaranteed low rate. VA adjustable rate mortgages differ from conventional ones in that VA adjustable rate mortgages can only increase 1% each year, at a 5% maximum increase over the duration of the loan.
Hybrid ARMs work much in the same ways as ARMs, except they keep the interest rate fixed for a set period of time, after which the rate can be increased by the lender. The VA specifications are that Hybrid ARM repayments can be increased 2% each year, with the same 5% maximum increase.
How Hybrid ARMs Can Work
ARM mortgages leave borrowers with the possibility of increased mortgage payments each month. But they can be a smart move for veterans and other qualified people who plan ahead and intend to get a VA Streamline Refinance Loan down the line. For those people, getting a VA Hybrid ARM Loan and then switching over to a VA Streamline Refinance Loan once the set period on the loan has expired can save them a great deal of money. In addition, it can keep their monthly payments low.
Growing Equity Mortgages
Growing Equity Mortgage increase at time goes on, but the increase applies only to the principal amount of the loan and not the interest. With a Growing Equity mortgage, you can save money on interest rates and pay more of your loan off.
Graduated Payment Mortgages
Graduated Payment Mortgages work by offering VA Loan borrowers a low interest rate each more that gradually increases over time up until the sixth year. When the sixth year hits, the amount levels off. Graduated Payment Mortgages can be excellent options for veterans with limited funds at the time they purchase their home who require a low initial VA Loan rate. Graduated payment mortgages can also work well for VA Loan holders that expect a raise or big promotion in the future.