Searching for a VA home loan can be confusing. Getting a VA loan can either be a nightmare or it can be an easy and simple process. The difference is in what lender you choose. These tips will help you compare VA Home Loan lenders.
1. Ask your loan officer if the loan is a fixed rate mortgage or an adjustable rate mortgage. The advantages of a fixed rate mortgage are no surprises. Your payment will remain the same for as long as you have that loan. The advantages to an adjustable are usually a rate that is 1.5%-2% lower. This can equal huge savings. For example: a $100,000 loan with a rate of 5.5% is $567.00 per month (principal and interest only). A $100,000 loan with a 3.5% interest rate is $449.04 per month. Over a 3 year term, this will save the borrower $4,246.56. The disadvantages of an adjustable rate loan are that the payment may increase in the future. Always ask for the worst case payment based on the highest rate.
2. Ask your loan officer if they are a direct lender or a broker. The advantage of a direct lender is that they can expedite the loan process. The disadvantage is that they may be limited in what they can offer. A direct lender usually will only have one program and one interest rate. A broker may be working with dozens of lenders, each with their own rates. Some lenders like VA Home Loan Centers offer a hybrid system where they are a direct lender and the can also broker loans.
3. Keep an eye on your credit. Be careful when comparing lenders and loan programs. Do not let your credit be pulled multiple times. Having different lenders pull your credit can lower your score. A lower credit score will mean a higher interest rate. A loan broker can submit you to multiple lenders without having to keep pulling your credit.
4. Compare / read your Good Faith Estimates (GFE). Your VA lender is required by Federal law to give you a Good Faith Estimate within 3 days of filling out a VA Home Loan Application. This will explain all of the loan charges (even the ones that the seller will pay). Have your loan officer explain all of the items and who pays for what.
5. Find an established, reputable loan officer. Check with Yelp or Google maps for past client reviews. Ask the loan officer how many VA Home Loans they have done. If you are making the biggest investment of your life, you should use caution. Not all loan officers are honest or reliable. Additionally not all loan officers are experienced. A VA loan is not like a conventional loan. An inexperienced loan officer can ruin your home purchase or cost you tens of thousands of extra dollars over the life of the loan. A good test is to ask what the VA funding fee will be. If they cannot tell you immediately, then they probably do not know what they are doing.
6. Ask questions. If your loan officer is not patient, they are not any good. Buying a home is complicated. Your loan officer (and Realtor) are there to help you. It is their job to make sure that you understand the process of obtaining a loan. Your loan officer should be an expert at originatiing Veterans Administration Home Loans. If they cant take the time to answer questions, they cant take the time to make sure everything is perfect. Bottom line: You are a hero and you deserve respect.