VA Rates were at their best on Monday at 6.12% and only got worse from there. This was not a good week to lock in your VA loan. The markets continues to fluctuate and the bond market acted accordingly. We topped out the week and 6.50% but recovered slightly on Friday afternoon. We ended the week at 6.25%, about ¼ above our recommended lock. We continue to recommend a lock at 6.00%, this is a great rate to be holding for the next several years.

There continues to be uncertainty as to what the economy is going to do. In the short term I suspect it will get slightly worse, so we will continue to see fluctuations in the bond market.  If you’re looking to buy in the next couple months, I strongly suggest you get pre-qualified so you’re ready to lock at a moment notice. I think we will see 6.00% again next week.

It’s a new week, VA interest rates are on the rise this week. It is unknown how long they will remain above 6%. If you’re looking to buy a home within the next 30-45 days, I recommend you apply now and float your rate. By floating your rate it allows us to rate shop for you and when rates drop back to the 6.0 – 5.875% level we can lock you in (with your approval). Rates will remain uncertain as long as the economic crises continues to unfold. Any VA Rate at 6% should be considered a good and safe rate to lock.

Ask for a Good Faith Estimate (GFE)
If you inquire about a loan with us or any other lender, ask for a good faith estimate. This document can be easily prepared and it will show all fees, and commissions associated with the loan. This will allow you to easily compare the fees for different companies. However, it will be difficult to compare rates unless you received all the GFE’s on the same day at the same time. (note: you should not give out your Social Security Number when shopping. Each time you give it out, someone will check your credit file and this could impact your credit score.)

Loan Origination Fee
Ask or review the GFE to see what the loan officer is charging you for originating your loan. This is the compensation paid for the 30 days of work usually required to process the loan package. It is acceptable to pay 1% of the loan amount but no more!

Application FEE
Don’t pay It, this is a Junk Fee. If a lender/broker tells you there is an application fee they are just wanting to make money on you before getting started. This is a bad sign that you may pay additional junk fees later on. A lender/broker should be willing to accept your loan application and process your loan without the application fee. They are compensated for all their work from the loan origination fee when the loan closes.

Rate Shopping
Ask the lender/broker if they can rate shop for you. If you contact a bank, credit union or even some direct lenders, they will only have one VA estimate to offer you. You get one choice which is not much of a choice at all. But if you contact a mortgage broker such a va-loans.com, we have access to 75 lenders nationwide allowing us to look for the best rate and the lowest fees. We will look for the best option and provide you an estimate (GFE) that will contain all the fees and interest rate associated with the loan so there are no surprises at closing.

The current economic crises has the stock market going crazy and the bond market too. Mortgage interest rates are affected by the bond market so as you can imagine rates are going crazy from one day to the next. One day last week we were seeing VA 30 year fixed at 5.875%, the next day the stock market tanked and rates went to 6.5%! On a $200,000 loan that is an $80 difference in your monthly payment.

Rate locks offer you the protection of a set rate that won’t move while you shop for a home. When you apply for a VA loan, you can opt to have your rate locked, or let it float for a while. When rates drop as they did today (5.75%), you can lock that rate in so its guaranteed. Once you lock a rate you have to close on a home within 15-30 days (ask your loan officer the exact time window). If you don’t close on a home within the window provided, you lose the rate and the current rate will apply.

We recommend all military families looking to buy a home in the very near future to apply now, and get pre-approved. Then ask your loan officer what rates have been doing. He or She can tell you what the rates have been doing and can advise you when you may want to consider locking in. Just because the rates dip one day doesn’t mean they will be as good the next.

Over the last two weeks you have probably heard about the stock market going crazy! One day a 900 point loss the next it rebounds. Well mortgage interest rates do not follow the stock market but they are affected by the bond market. As money is put into and taken out of the stock market many people move it into and out of the bond market causing huge swings. Two weeks ago we saw va interest rates of 5.875%. This week we have seen them at 6.5%. A change of just .5 percent can affect your mortgage by $100 or more!

Rates are not expected to remain high, in fact as we learn more about the $700B economic rescue plan, the markets will settle down as well as the bond market allowing interest rates to come back to 6% or less.