What they are
Active Duty Military & Veterans have some of the best loan options in the industry available to them. While each of these loan programs have their own pros and cons, we can help you find the right VA loan program to fit your needs. Whether your goal is simply to save money on your monthly mortgage payment or to pay down your home quicker, there is no better time than to refinance.
15, 20, 25, and 30 Year Fixed Rates
Fixed rate loans are the simplest and most popular loan programs. They are easy to understand and best of all, they are fixed, which means your payment remains the same throughout the life of your loan. One thing to note, however, is that there are different term limits on fixed rate loans. For someone looking to keep their payments low, a 30 year option is best. Sometimes, however, home owners are scared to refinance because they would start their mortgage cycle over. For situations like this a 15 or 20 year term might be better option. Also, since our VA loans have no prepayment penalties, Veterans often opt to go with a 30 year fixed loan, while paying extra each month. That way, their minimum payment is lower (in case of emergency) but they are accelerating their loan term. With that being said, Veterans refinancing their 30 year fixed loans into 15 or 20 year terms sometimes see little to no increase in their payments. In fact, the shorter the loan term, the lower the interest rate will be (usually).
ARMs have a negative stigma associated with them. If you are refinancing, an ARM could potentially increase your payment. Careful planning and a full understanding of your current situation is crucial in deciding whether these options are right for you. Call today for a no-obligation consultation.
- Typically lower interest rate than a fixed rate loan.
- Interest Rate is fixed for the first 3 or 5 years then adjusts either up or down.
- Unlike traditional ARMs, the VA hybrid loans can fluctuate 1% yearly.
- Hybrid loans have a lifetime cap of 5% fluctuation.
- After the fixed rate period, the Hybrid re-amortizes every year.
- You pay interest on what you owe rather than the original balance.
VA Funding Fee
The VA funding fee is required by law. The fee, currently 2.15% on no down payment loans for a first-time user, is intended to enable the veteran who obtains a VA home loan to contribute towards the cost of this benefit, thereby reducing the cost to taxpayers. The funding fee for second-time users who do not make a down payment is 3.3%. The idea of a higher fee for second-time user is based on the fact that these veterans have already had a chance to use the benefit once, and also that prior users have had time to accumulate equity or save money towards a down payment.
For purchase and construction loans, members of the regular military fall into the category of first time user or subsequent user. For first-time users, with no down payment requires a 2.15% fee, with a down payment of at least 5 percent but less than 10 percent requires a 1.5% fee, and with a down payment of 10% or more requires a 1.25% fee. For subsequent users, no down payment requires a 3.3% fee, with down payment of at least 5 percent but less than 10 percent requires a 1.5% fee, and with a down payment of 10% or more requires a 1.25% fee.
For the category of Reserves / National Guard, first-time users with no down payment requires a 2.4% fee, with a down payment of at least 5 percent but less than 10 percent requires a 1.75% fee, and with a down payment of 10% or more requires a 1.5% fee. For subsequent users for the category of Reserves / National Guard, no down payment requires a 3.3% fee, with a down payment of at least 5 percent but less than 10 percent requires a 1.75% fee, and with a down payment of 10% or more requires a 1.5% fee.
Cash-out refinancing loans for regular military require a 2.15% fee for first-time users and a 3.3% fee for subsequent users. For Reserves / National Guard, the requirement is a 2.4% fee for first-time users and a 3.3% fee for subsequent users. If there are down payments involved, refer to the information above. On interest rate reduction loans, the VA funding fee is .50% and it is 1.0% on Manufactured Home Loans.
The following persons are generally exempt from paying the funding fee:
Please note that the VA has the final say on who is exempt.
- Veterans receiving VA compensation for service-connected disabilities.
- Veterans who would be entitled to receive compensation for service-connected disabilities if they did not receive retirement pay.
- Surviving spouses of veterans who died in service or from service-connected disabilities (whether or not such surviving spouses are veterans with their own entitlement and whether or not they are using their own entitlement on the loan).