VA Loan Rates: Why Do They Change?

va loan ratesDeciding to buy a home is a huge decision and is confusing with all the terminology that gets thrown around. One option for veterans is to use a lender that offers VA loans. Once you decide that a VA loan is right for you, the next thing to examine is VA loan rates from one lender to another.

A lower interest rate on a loan means that you’ll have a lower monthly payment and end up paying much less over the life of the loan.

VA Loan Rates

What are the Benefits of a VA loan?

A VA loan does not require a down payment, unlike other loan programs. Most require at least 20% down to avoid paying private mortgage insurance, while a VA loan you can finance the entire cost of the mortgage.

Since VA loans are guaranteed by the government, individuals who get a VA loan and don’t put down at least 20% are exempt from paying for PMI. This also means you’ll have a lower monthly payment than you would with other loan types.

Lenders offer VA loans because they are government guaranteed and create less of a risk than other mortgage programs to the lenders.

Why and how Often do rates change?

VA loan rates are highly regulated, but they’re not fixed and vary depending on how the market performs that day. In the past, the VA set their own lending rates, but that’s not the case any longer. Lenders are allowed to charge their own rates to keep the market competitive with other VA lenders and other loan programs.

The Government National Mortgage Association (GNMA), commonly referred to as Ginnie Mae, provides liquidity in the market. They do this by purchasing VA loans from the lenders that issue them.

Lenders sell the loans to get money to provide more loans to consumers. The GNMA 30 year bond gets traded on the market daily like other securities and bonds that are bought and sold based on investor strategies.


Every day lenders look at the Ginnie Mae bond price and change their interest rates to match. The index each lender uses is the same, meaning that rates vary little from one lender to another. Rates from one lender to another aren’t static but don’t expect to see drastic differences when looking at the different loan rates from one bank or credit union to another.

Rates can change daily and frequently vary from the morning until the afternoon, especially if something affects the market. Investors put money into the market if they feel confident about how the economy is doing.

They’re more likely to invest money in stocks and transfer money from bonds. This causes interest rates to increase, while rates tend to decrease if investors feel that economy is headed downward. Understanding

Assists in broadening your knowledge of the mortgage process and different types of loans available. This information will assist you with pursuing the loan type that fits your financial situation and home-buying goals.

Are VA Loan Gift Funds Allowed?

va loan gift fundsVA loans have cemented their position as one of the most valuable loan products in the market. The loan product offers a lot of amazing benefits to eligible veterans. These include, in addition to others: zero down payments and no cap on seller’s contribution to the closing costs. Now, when it comes to closing costs it is not really that easy to find a seller. A seller should be ready to pay the costs and all such costs have to be taken care of before the loan is sanctioned. Apart from under certain special circumstances. But, there is an easy solution out of this. And that solution is VA Loan Gift Funds.

What Are Gift Funds?

Gift funds are very simple to understand. They work exactly like a gift does. Your friends or family give you a certain amount of money without any conditions. VA loan Gift funds allow the money to be used for covering the closing costs towards a VA loan. However, there is a set of restrictions that the applicants need to adhere to. These conditions are generally easy for the loan applicants to fulfill. And are, of course, much less stringent than a regular home loan any given day.

Applicants cannot just show up with a pile of cash and call them gift funds for a VA loan. If they get such a gift fund, then they must be able to prove that it came from a legitimate source. Such a source can include family members or even family-like relations, where even friends may qualify. Even if the gift funds are coming from a known person, they should also have a legitimate paper trail. This means these funds should have records with an established financial institution or a bank.

Who is the Source of the Gift Fund?

Another important thing to keep in mind is that no person who is involved in this entire transaction process, in any way, can act as a source of the gift fund. So, someone like a lender cannot become a sponsor of VA loan gift funds. To make sure that this condition is met, the applicant needs to produce a letter with the gift fund. This letter will include all the important details of the donor. It will also include the amount of gift funds, and the date of transfer of these funds to the recipient. This letter also carries an important disclaimer that clearly states that the donor of the gift fund. This donor, in no way, is expecting a repayment of the funds they have gifted.

VA Loan Gift Funds

In the case of VA loans, there are a lot of provisions that make it easier for the applicants to get the loan. The same goes for gift funds as well. Unlike other loan products, a loan applicant is not required to provide a copy of the “gifter’s” bank statement to the lender or to the VA authorities. All they need to do is to present a cancelled cheque, which is considered ample proof of documentation for a VA loan.

Gift Funds can most definitely be used to fund a VA loan and as it turns out it is easier to get a gift fund with a VA loan than with a regular loan.

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