Tuesday, November 6, 2012

Essentials of Locking VA Mortgage Interest Rate

VA home loans are all about getting the dream home you have always wanted and at the same time getting it without the need to shell out a huge amount of cash at one time. The catch with home loans are the irregular interest rate on every VA loan. Not many people know that interest rates can actually increase through time and not many people know that locking in their interest rate should be the first thing that they do after getting a loan.
Whenever you get a quote for a VA mortgage rate, this rate may increase. The interest rate can increase on a regular basis so the original mortgage quote, in general, is futile. to avoid this, as a client you should demand that all rates should be locked in and should stay just as it was quoted by your bank or lender. This way you can save yourself from the increasing interest rates, and expect that your monthly mortgage rate would be the same.
When is the best time to lock in your mortgage rate?
This is the question that has been asked by a lot of people. Usually, they find it hard to look for lenders or brokers who can guarantee a stable interest rate for the duration of the pay period since most lenders have increasing interest rates on the mortgages that they offer. Before you think about how to refinance your VA mortgage rate, the first mortgage problem that you will encounter is when to lock in the rate quoted to you. The usual practice is to lock the mortgage rate at the beginning of the loan application and even before it is submitted to underwriting. Some borrowers wait at the rate to improve but this option will always be a gamble.
Once locked, get it in writing
Once you have locked your mortgage rate, make sure that everything is in writing. If your lender or bank will not give you a document ratifying what has been said, than you have to second thoughts about this lock-in since it might not be true. It's important that you get all statements in writing since increase in interest rates can happen after a few years and during that time, people involved in the transaction may be gone already or may have forgotten the lock in; the document serves as a proof that the interest rate will stay the same.
Be aware of possible changes
For every VA home loan rate it is important to take note of all conditions and remarks at the time of loan application. Why? Because even if you have locked in your mortgage rate, some lenders and brokers have the power to change this and still increase the mortgage rate. In short, you have to know exactly what you are getting yourself into.