VA refinance rates 30 year Miami Fort Lauderdale Florida
This is a common question consumer ask. And rightly so because the amortization period, the period in which the loan is completely paid, affects not just the monthly payment but also the amount of interest paid over the life of the loan. VA refinance rates 30 year Miami Fort Lauderdale Florida
Continue reading to learn more about how to choose between a 15 year and a 30 year VA mortgage. Refinance rates Miami.
Understanding the Amortization Period. Refinance rates Miami.
When deciding between a 15 year VA mortgage or the 30 year, take into consideration not just the monthly payments but also the affordability. Let’s look at the difference an amortization period can make. Refinance rates. VA refinance rates 30 year Miami Fort Lauderdale Florida
Take a loan amount of $250,000 and a hypothetical 15 year VA mortgage rates of 3.75%. The result is a monthly principal and interest payment of $1,818. Refinance rates. Now, take the same loan amount with a similarly priced 30 year VA mortgage at 4.00%. That would bring the monthly payment to $1,193.
Note that for all of the illustrations, we are talking about the monthly principal and interest payments only. Refinance rates. Your actual payment will be greater thanks to escrow for property taxes and insurance.
The difference in monthly payment is $625. That’s a lot. You’ll notice that a 30 year VA mortgage rates will always be a bit higher than a 15 year fixed rates, but not by much. That’s how lenders price their loans; a 15 year VA mortgage will usually be about ¼% lower than a 30 year VA mortgage. VA refinance rates 30 year Miami Fort Lauderdale Florida
Many veterans choose a 15 year VA mortgage over a 30 year due to the amount of interest saved over the life of the loan. Using the same example shown above the 15-year loan yields just over $77,000 in mortgage interest. The longer term 30 year VA mortgage? Almost $180,000!
The difference in interest savings for a 15 year and a 30 year VA mortgage is a whopping $111,000! So why doesn’t everyone take the 15-year loan term?
Qualifying for a 15 Year VA Mortgage. Refinance rates Miami.
Higher monthly payments mean it requires more monthly income in which to qualify for a 15 year VA mortgage. Refinance rates. Yes, the payments are lower for the 30-year loan but even if you wanted the 15-year mortgage it would take more monthly income before a lender would approve you. In this example, the 15 year VA mortgage would require almost 2/3 more gross monthly income in order to be approved.
That’s why the 30-year mortgage is much more common than the 15-year mortgage. Rates. The 15 year VA mortgage may make more sense financially with regard to interest savings yet the 30 year VA mortgage allows you to buy more “home” with lower payments.
But the choice is not always so “black-and-white.” Refinance rates. There are more choices than just the 15 year VA mortgage and the 30 year but most consumers aren’t aware of them. Maybe neither 15 year nor 30-year mortgage is the better option. VA refinance rates 30 year Miami Fort Lauderdale Florida
Why not something in between? Refinance rates Miami.
The 15 year VA Mortgage and the 20 year and 25 years VA Mortgage
Lenders can typically offer fixed rates mortgage amortization periods in increments of five years. So instead of a 15-year loan with the higher monthly payments, what about a 20 year? Or even a 25 year?
That’s right. They’re available at your VA lender but you have to ask for the additional options. In fact, some loan officers may not even be aware of these additional loan terms.
So what do the different loan terms look like? Again, using the same loan parameters, a 20-year loan at 3.75% and a 25-year loan at 4.00% look like this:
20 year fixed rates = $1,482 per month Refinance rates.
25 year fixed rates = $1,320 per month Refinance rates.
And the interest paid over these additional loan options? Refinance rates.
20 year fixed rates = $105,680 interest paid Refinance rates.
25 year fixed rates = $145,700 interest paid Refinance rates.
Historically, choosing between a 15 year and a 30 year VA mortgage led most to select the 30-year option with the lower monthly payments and easier qualifying. Refinance rates. However, there are additional choices that may just combine the best of both worlds…easier qualifying and less interest paid over the life of the loan. VA refinance rates 30 year Miami Fort Lauderdale Florida
Fixed Rates VA Housing Loan. Refinance rates Miami.
A fixed rates mortgage is the loan that most people think of when considering a mortgage. Refinance rates. Since the interest rates never change, homeowners benefit from stability and predictability in their mortgage payments.
If stability is important to you, or if you are not fully confident about the economy or your job security, then a fixed rates mortgage is the right instrument for you.
15-year VA Mortgage Loans. Refinance rates Miami.
A 15-year VA home loan means you will make monthly payments that will repay your entire mortgage amount in 15 years instead of the usual 30 years. Refinance rates. While the monthly payment is a little higher, typically the interest rates are slightly lower than it is for a 30-year mortgage.
This option could save you thousands of dollars over the life of your loan, depending on the loan amount.
30-year VA Mortgage Loans. Refinance rates Miami.
Thirty years is the most common length, or term, for a VA home loan. By lengthening the duration of the mortgage, the monthly payment amount for the loan is lower than the payment on a 15-year mortgage, but you will pay more in interest over the course of the loan.
Hybrid (Adjustable) Rates Mortgages (ARM). Refinance rates Miami.
A hybrid rates mortgage, also known as an ARM or adjustable rates mortgage, offers home buyers lower interest rates, at least initially. Since it’s easier to borrow more, this can help first-time buyers afford more house for their budget. VA refinance rates 30 year Miami Fort Lauderdale Florida
As a general rule of thumb, if you expect to stay in your home for less than five years you will probably do better with an ARM. However, it is critical you honestly evaluate your ability to pay higher rates over time.
VA Housing Loan Eligibility. Refinance rates Miami.
To determine your eligibility for VA mortgage loans benefits, you will need to obtain a Certificate of Eligibility (COE). This is the only reliable Proof of Eligibility on which the Lender may rely, except in the case of an Interest Rates Reduction Refinancing Loan (IRRRL).
We would be happy to obtain this document for you, but, if you prefer, you may follow this link and apply for a COE online. Rates. Your COE determines that you meet the basic criteria of appropriate length and character of service to take advantage of the VA home loan benefit. VA refinance rates 30 year Miami Fort Lauderdale Florida
An eligible veteran must still meet credit and income standards in order to qualify for a VA-guaranteed home loan and to obtain loan approval.
VA Housing Loan Entitlement. Refinance rates Miami.
Entitlement is the amount available for a veteran to use on a VA mortgage. The amount of available basic VA mortgage loan entitlement is $36,000. Rates. This may be reduced if a veteran has used entitlement before which has not been restored. This is the amount for which the VA is liable to the lender in the event of default, not the amount available to be borrowed.
First-Time Home Buyers. Refinance rates Miami.
It’s important for first-time buyers to prepare themselves and set their expectations in order for their home-buying experience to be successful. Rates. Here are some tips to get new home buyers through the process of applying for VA mortgage loans:
First, you must understand what you can afford. Start with a realistic household budget, and don’t forget to leave something in reserve for unexpected expenses. Rates. Make sure your budget includes money for property taxes, insurance and unexpected repairs down the road.
Rates: Get pre-qualified on your VA loan before you make an offer. It’s a great way to double-check your estimates, and it avoids wasting a lot of time. VA refinance rates 30 year Miami Fort Lauderdale Florida
Make sure that your expectations are in line with your budget. Rates. If you think about it, your first car probably wasn’t a Mercedes, but it got you where you wanted to go. VA refinance rates 30 year Miami Fort Lauderdale Florida
At the same time, don’t compromise on features you really need. If you need three bedrooms, don’t settle for two. Rates. It’s smart to make compromises in favor of affordability, but don’t sacrifice something that’s essential. VA refinance rates 30 year Miami Fort Lauderdale Florida
Most important, be patient and keep looking until you get as close to what you want as possible for what you can comfortably afford. Refinance rates Miami. VA refinance rates 30 year Miami Fort Lauderdale Florida