VA mortgage loans are known for their attractive terms including low interest rates. But how much do the savings really add up to? Are the savings significant enough to make a VA loan a worthwhile option? Here’s what military borrowers need to know.
VA Mortgage Rates Vs. Conventional Loan Rates
Getting a low interest rate on a loan is important because it means you’ll pay less each month. This makes it easier to handle your bills and save some money. Additionally, a lower rate can also save you a lot of money over time. A lower rate can help you pay off your home loan faster and gives you some breathing room in case money gets tight. So, it’s always a good idea to look around and try to get the best rate you can when you borrow money.
If you’re an active duty military member, veteran, or someone who qualifies for a VA loan, it’s important that you take the time to compare your options. While conventional loans are a great option for those who qualify, VA loans are often the better choice for those who are eligible. Experts estimate that rates for VA mortgage loans are usually about 0.25% lower than those for FHA and conventional mortgages.
Why Are Rates Lower for VA Loans?
VA (Veterans Affairs) loans often offer more favorable interest rates compared to conventional loans, primarily because the Department of Veterans Affairs backs a portion of each VA loan. This government backing reduces the risk for lenders, allowing them to offer lower rates and better terms to borrowers.
VA Loan Total Interest Savings
The savings from a 0.25% lower interest rate on a VA loan compared to a conventional loan can be significant over the lifetime of the loan, especially for large loan amounts and long terms typical of mortgages.
To illustrate, let’s consider a 30-year fixed-rate mortgage of $300,000. A 0.25% difference in interest rate might seem small, but over 30 years, it can lead to substantial savings in interest payments.
Over the lifespan of a 30-year loan, the total interest paid on the conventional loan would be about $200,165, compared to about $184,968 for a VA loan. This means choosing a VA loan could save you around $15,197 in interest payments over 30 years.
Explore Current Rates for VA Mortgage Loans
Take advantage of your VA benefits and explore current rates for VA loans. Call today to speak to an expert and get more information!
