7 Benefits of VA Loans: Why It's Still King, Even as Rates Are Rising
Veterans, It’s Still a Good Time to Buy a Home—As Long as You Don’t Wait Too Long
If you’ve been paying attention to mortgage rates, you know that right now, they’re rising.
In fact, they’re the highest they’ve been in four years.
We can’t say that it wasn’t expected to be this way. To the delight of homebuyers everywhere, rates stayed below 4% for a long while—but they couldn’t stay that way forever.
At the end of 2017, most of the major analytical companies predicted that rates would increase to 4.4% by the end of 2018.
But here we are in the first half of 2018, and rates have been “on a tear,” according to Freddie Mac. They’ve already reached the 4.4% mark predicted for the end of 2018. Who knows what they could be by December?
The good news is that if you’re a veteran, you’re still in a good position to buy a home—at least for a while. Here are seven big reasons why you shouldn’t give up on homeownership with a VA loan, despite climbing rates.
1. VA Loan Rates Are Lower Than Conventional Rates
One of the major benefits of VA mortgages is that their rates tend to be lower than rates for conventional loans.
It’s not just a tiny amount, either.
According to Interest.com, in December 2017, on average, VA loans had a 4.05% interest rate, while conventional loans had a 4.32% interest rate. For the borrower, that kind of difference can mean thousands of dollars over the lifetime of the loan.
This is something that good VA-approved lenders take very seriously. For instance, at Low VA Rates, we do everything we can to give you the lowest rates possible. We’ll even pay you $250 if you find a competitor that we can’t beat.
So, even as rates are rising across the nation, with a VA loan, you’ll be paying less than many will be on their conventional loans.
2. Interest Rates Are Predicted to Continue Rising
You might be thinking about waiting to buy a home because of the possibility that rates could go back down. Though it’s true that it could happen, predictions are that it won’t.
According to the director of economic research for Realtor.com, rates are predicted to rise to 5% by the end of 2018.
When it comes to your mortgage payments, that much of a difference in rates can mean thousands of dollars.
For instance, if you had a loan for $100,000 and rates were at 4.4%, you’d be paying $501 per month, or $180,274 altogether. If that $100,000 loan were made with rates at 5%, you’d have a monthly payment of $537, or $193,256 over the life of the loan.
That’s a difference of over $13,000. So if you’re looking for a home, it might be in your interest to go for one sooner rather than later.
Keeping Historical Rates in Mind
The last few years, rates have stayed under 4%. When you consider that rates have historically been closer to 7%, this seems miraculous.
But at some point, things have to change. And as we mentioned previously, they’re starting to increase quicker than experts predicted.
What’s more, when compared to historical numbers like 8%, 4.4% suddenly doesn’t look so bad. Don’t let the thought that maybe things will go back to the “normal” of the last four exceptional years keep you from getting into a home.
To take advantage of rates before they rise even higher, get started on a loan with us today. VA loans can help you get into a home before rates are too high, since they offer some of the most competitive rates in the market.
3. VA Loans Don’t Require a Down Payment
One major aspect of VA mortgages is that they require absolutely nothing for a down payment. This is a glowing benefit, considering that conventional loans require up to 20% down.
And even as rates are rising, you still won’t have to make a down payment, making it all the more affordable for you to get a home. You’ve earned it through your service to the country.
4. Home Prices Are Still Increasing
According to Forbes, home prices have been increasing for 23 consecutive months, but this increase can’t last forever. Forbes predicts that during 2018, home price increases will start to slow.
However, according to the same Forbes article, these price increases aren’t predicted to stop, just slow, so in order to take advantage of the current market, you may want to consider looking for a home sooner rather than later.
5. No Required Private Mortgage Insurance (PMI)
Most loan types require that you purchase PMI, which protects the lender in case you default on the loan. PMI can be around 0.5% to 1% of the loan amount, which can add up to thousands of dollars over the life of your loan.
But VA loans don’t require it at all. A portion of these loans are insured by the government, creating less risk and allowing for more lenient guidelines.
There is, however, a VA Funding Fee that is required of most veterans. This is a one-time fee that is between 1.25% and 3.3% of the loan. The good thing about it is that you can roll it into the cost of the entire loan. And with no required down payment, lower rates, and other benefits of a VA mortgage, this doesn’t end up having as big of an impact as it would otherwise.
6. Inventory Levels Are Expected to Increase
The growth will likely be slow, but it’s still predicted to happen. This growth can give you and other homebuyers some relief, allowing you to choose from more properties without as much competition (and stress).
7. It’s Easier to Qualify for a VA Loan
VA loans are often easier to qualify for than other loans. These loans are a benefit to the veterans who defend this country, so they are designed to have less strict requirements.
Though many VA-approved lenders prefer that you have a credit score of at least 620 to qualify for a VA loan, some will work with you to look at your entire financial situation instead of just one detail. At Low VA Rates, we’ve approved people with low credit scores after taking their overall situation into account.
There are a few additional things a VA loan requires, like a Certificate of Eligibility (COE) and that a property that meets minimum VA standards. But, as far as the qualifications go, it is often easier to qualify for a VA loan than for other types of loans.
Don’t Miss out on That Perfect Home
The bottom line is that even though interest rates are going up, the VA home loan is still a great choice for many veterans to make.
Don’t give up on ownership just yet. There are so many benefits to VA loans, you won’t want to miss out.
To figure out whether you’re in a good space to get a VA mortgage, talk to one of our mortgage professionals today. We’ll help you look at rates, your personal finances, and other things all woven into becoming a homeowner. We strive to get you into your dream home by getting you a great loan.
As a veteran, you deserve it.