So, you’re ready to start the next chapter of your life and buy a home? You’ve saved your money, get your finances in a good place, and are ready to take the next steps. Now, all you need to do is figure out how to finance your purchase. Should you choose a Veteran home loan or a conventional mortgage? Which option offers the best rates? Here’s what you need to know.
Why Are Mortgage Rates Important?
Mortgage interest rates have a big impact on the overall cost of your loan. A lower interest rate means you’ll end up paying less over the lifetime of your loan. Therefore, it makes sense that you would choose the type of loan that offers the best rate.
How Much Does a Lower Rate Matter?
When it comes to mortgage rates, even a 1% difference can have a big impact. Over the years, you could save thousands of dollars.
For example, say you take out a 30-year loan of $300,000 at a rate of 4.5%. Over the lifetime of the loan, you’ll pay a total of $547,220. If you reduce the interest rate by 1%, you’ll only pay $484,968 over the life of your loan. That’s a big difference!
To get a better idea of how a lower rate could impact the cost of your loan, check out our mortgage calculator.
Do Veteran Home Loans Have Lower Rates?
Yes. In general, Veteran home loans tend to have lower interest rates than conventional loans.
This is because VA loans are backed by the federal government. This means that the lender takes on less risk since the loan is ensured by the government.
For this reason, FHA loans and USDA loans also tend to have lower rates than conventional loans. However, when you look at all the options, typically, VA loans still offer the lowest rates.
Additional Benefits of VA Mortgage Loans
If you’re on the fence about whether you should take out a Veteran home loan or another type of loan, there are some other factors you may want to consider. In addition to offering lower rates, VA loans also provide borrowers with other benefits like:
- No down payment requirement
- Skip the PMI
- Relaxed credit requirements
- Lower closing costs
- Relaxed DTI requirements
- No prepayment penalties
Apply for a VA Loan Today
Ready to take the next steps? We’re here to help! Fill out an application today to get prequalified for a VA home loan. Or, if you have questions about the process or would like to speak to an expert, please do not hesitate to contact our office. We will be more than happy to chat and provide you with additional information.