I'm looking to purchase a house in the 600-650K range and have been trying understand VA loans to make sure Im not getting ripped off. I've been asking around at different lenders for their rates and I get vary different storys. One company has quoted me a 0pt 3.25% and 3.42 APR with $3717 total lender closing costs. USAA quoted me a 3.75% and 4.02% APR with .5% total lender fees, which would be about $1750. USAA said the first deal seems fishy because they arent sure how they are getting a 3.25% rate with 0pts. Am I missing something? The lender with 3.25% said that somone at USAA is making some money charging a 3.75%.
Also I put the 3.25% rate into an APR calculator with $3717 total closing costs and I get an APR lower than what he said. Why would he say the APR on the 3.25% rate is 3.42%?
The 3.250% rate seems very low for a jumbo VA loan. Last Tuesday it'd be completely possible, but since the election results were announced rates have gone up almost .500%. Should be able to get a little better than USAA's though.
The reason your APR is different than theirs is likely because you aren't including all of the APR affecting fees, there are a lot of them - VA funding fee, prepaid interest, lender fees, escrow/settlement fee, etc. The only items that will change lender-to-lender will be interest rates & their lender fees. APR will be different, but since there are a lot of different ways to manipulate the APR I wouldn't give much weight to it.
Thanks for the reply.
Yes I'm only speaking about lender fees on both scenarios. Also I forgot to mention that we are putting down 270K. I believe the VA funding fee is tacked on to the loan.
If the loan amount is $417k or less then 3.250% would be more realistic, assuming a high credit score.
VA funding fee is financed into the loan amount, but it's still an APR fee. When an APR is quoted, they are factoring in all APR-related fees, whether it's being charged by the lender or another party. For other party's APR-related fees they will be estimating what they are.
With $270k down, is there a reason you are leaning towards VA over conventional? VA rates are lower than conventional, but consider the funding fee as paying "points" in order to accurately compare the VA loan vs. conventional loan. i.e. if the VA funding fee is 1.25% then compare that to conventional paying 1.25 points to buy down the rate.