Interest rates on VA home loans change constantly. Deciding when to lock your rate is often a question of risk and reward.
Over the life of a 30-year mortgage, the difference in interest rates can definitely make a difference to your bank account. For example, on a fixed-rate 30-year mortgage at $150,000 and 5.5%, your monthly principal and interest payment is $851. Move the rate to 6% and that payment is $899 per month, an extra $48. Not a tremendous difference per month, but over the life of the loan you’re talking about paying an extra $17,000 in interest. Many uncertain, uncontrollable things shape the markets that determine rates.
If you’re not locked into a loan rate you’re “floating,” as it’s called. Potential homebuyers are almost always going to be floating until they’re actually under contract on a home; most lenders will require a property address for a rate lock.
Locking the Rate
At the end of the day, every VA borrower wants a crystal-clear answer to the big question of when they should lock in their interest rate for their home loan. Unfortunately, there’s no simple answer to that question. It’s ultimately up to you to pull the trigger.
That’s where Mr. VA comes in. We stay up to date on when rates are likely to rise, or at least be volatile, so you’ll be able to make the best decision before you close and consider locking your rate. There’s a second part to this answer, which is: Don’t look back or second-guess yourself.
It’s easy to beat yourself up if rates decline after you lock. There’s simply no need to get down on yourself. You made the best call you could at the time with the best information you had. It’s also important to keep the long view in mind. In terms of historical context, a rate you might consider “high” in the current environment would be the envy of anyone who purchased a home in the early 2000s, the 1990s or earlier, when rates were considerably higher. You may also be able to refinance into a lower rate at a later date.
So, do your homework and stay in constant contact with us at Mr. VA. But don’t obsess or get bogged down. Floating on your rate can certainly be a gamble. It’s really a question of whether you deem the risk acceptable given the potential reward.
Mortgage rates today are in limbo. Lenders on average have not moved their rate tables, which makes this a good time to lock in your rate. No increases are predicted, but anything can happen if President Trump shakes things up by announcing that he will be replacing Chair Janet Yellen.
If you’d like to learn more about the getting the best deal on your VA mortgage, please contact Mister VA at (805) 389-0505. We help active service members and veterans get the VA benefits they’ve earned. Mister VA provides expert services that help you get approved for a VA home loan through the excellent benefits of a VA or CalVet loan. We assist you with the DD-214 and VA Form 26-1880 Certificate of Eligibility.