VA LOANS and Rates

[destiny36912]

Are VA Loans rates dependent on your credit score?

Ex. 620 = 4.123 interest rate

Ex. 640 = 4.123 interest rate

Ex. 660 = 4.123 interest rate

I've read on these boards that it doesn't matter what your score is, everyone receives the same rate as long as you qualify/approved for a VA Loan.. Is this true? is this true for FHA as well? seems unfair (but not complaining) for people trying to get Prime Rates by improving their credit score.

[Anonymous]

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@destiny36912 wrote:

Are VA Loans rates dependent on your credit score?

Ex. 620 = 4.123 interest rate

Ex. 640 = 4.123 interest rate

Ex. 660 = 4.123 interest rate

I've read on these boards that it doesn't matter what your score is, everyone receives the same rate as long as you qualify/approved for a VA Loan.. Is this true? is this true for FHA as well? seems unfair (but not complaining) for people trying to get Prime Rates by improving their credit score.

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Although the lender will examine the borrowers credit history for a VA loan, amount of income, and other factors before approving the loan, the PRIMARY requirement to be approved for a VA home is the borrowers military eligibility, which is based on a person's lenght of continuous active service and other factors, such as when they enlisted and whether they served during war time.

[destiny36912]

Thank you! So is my interest the same no matter what my score is as long as I'm approved?

[Repo-ed]

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@destiny36912 wrote:

Thank you! So is my interest the same no matter what my score is as long as I'm approved?

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Correct, so long as you meet their minimum score requirement, which I believe is 620 middle.

[DrJim]

Can say for sure, but we closed a VA loan on 5 JUN at 3.75% with WF.

You can see my scores in my siggy - 709 midscore.

[OptimalFICO]

Destiny,

Our VA Lender just quoted me a rate on Thursday, July 19 of 3.25% with a lender credit of $3,500 which would go toward paying closing costs.

Make sure your lender does not charge a loan origination fee (ours charges a $1,590 lender and processing fee, which is part of their estimated closing costs). You should ask to see a lender's "rate sheet." Many will not show you because it reveals how much rebate is tied to a specific rate. Lenders like to try and sell you a higher rate in hopes of keeping that rebate for themselves. The problem is that the rebate is actually yours, which is why they won't always show you their rate sheet.

I'm assuming you are familiar with other VA terms? It is my understanding that now VA Buyers can pay up to 1% of the Purchase Price toward closing costs (including Allowables and NonAllowables). I was told that now the only thing a VA Buyer can't pay for is the required termite inspection, and things have changed so that a Buyer can pay for Section 1 and Section 2 repairs as well, as long as it doesn't exceed that 1%.

One great thing about VA Loans is that you don't have to have a down payment, but there are funding fees unless you qualify for a waiver.  Note that you can buy down the funding fee depending upon how much you put down, at least 5% (for us buys it down to 1.5%) or 10% (for us buys it down to 1.25%).

Make sure that you apply for your VA Certificate of Eligibility in advance. If doing so on short notice, your lender can often get this for you much faster.

[OptimalFICO]

Note the Lender Credit helps so that you don't have to ask the Seller for Closing Costs. In CA the real estate market is insanely competitive and most Sellers won't consider VA Loans. One strategy is to have as few contingencies as possible. Sometimes that's difficult under VA regulations. For example, we cannot waive a termite inspection nor appraisal (but it can be foolish to do so anyway, the regulations are there to protect the buyer and lender). But for us, what we are doing, is that if a house is beyond $400,000, we are asking for $1,000 Seller Credit so the deal won't be killed by some unforseen closing costs, but we increase our purchase price by that same amount. Whenever we request a Seller Credit, we make sure to write in that it can be applied to non-recurring, recurring, allowable and non-allowable closing costs so that no part of the credit will remain unused.  We are also not requesting a Home Warranty. We will buy that after the fact so that the cost doesn't come out of the 1% of closing costs we can pay. Good luck with your house search!

[destiny36912]

Thanks so much for the info. I'm thinking about going with Navy Federal. Can you PM me your lender? Navy Fed is offering 2500 towards closing cost and since I have not used benefits before so the funding fee would be 2.15% of purchase price. I was thinking about buying down the funding fee but rather hold that money for closing.. Closing cost scare the heck out of me. I'm not sure the lender credit will cover the entire closing cost. I'm sure I'll have enough money as I'm saving a lot of money. I just want to keep most of the money saved for reserves if I can help it.

[Zorasmiles]

Good thread to read! During my pre-approval- a few years back, the lender attempted to get me to do a conventional loan vs VA. At the time I was confused until I realized the money the bank makes on the mortgage loan. They only convinced me not to purchase. At the time I believed my interest rate was based on my credit score when applying for a VA mortgage loan. I'm glad to read here that the rates are the published rate by VA! Minus funding fees and points. Thanks