When economy slows down, Federal Reserve tries to encourage growth by lowering rates. Therefore, when you see yields bonds go down and interest rates on mortgages drop, it is a sure sign of recession. The year of 2009, besides bringing record unemployment and negative economic growth, also brought record low mortgage rates, the lowest since 1971. Many borrowers, including VA borrowers, want to know whether the rates have hit the bottom. With the worst housing market since the Great Depression, one may guess that the rates would continue to drop, as U.S. Government would try to make effort to revive the depressed market. However, it is rather questionable that the rates would pass the 4.5% mark. This way or another, VA borrowers have several advantages over other borrowers.
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VA Borrowers Have Unparallel Advantages
Non-VA borrowers see many factors affect their mortgage rates, such as credit score, household income, and so forth. VA borrowers, on the contrary, are protected against the impact of such factors, as they get low rates, as long as they meet relaxed criteria for VA loans. Even with less-than-perfect credit scores VA borrowers are able to enjoy lower rates, and are able to bring them further down by paying discount points upfront, like regular borrowers would. Therefore, it is a win-win situation for VA borrowers. Another important advantage that VA borrowers have is no need for large down payments that other borrowers have to come up with in tight economy and dropping housing market. In fact, most do not have to come up with any down payment at all, as most VA loans do not require any.
VA Loan Terms Are Better Than Ever
Therefore, anticipation of rates dropping further should not be a decisive factor for VA borrowers whether to get a loan now or wait a bit. With excellent features that VA loans are packed with, such as no money down and 100% refinancing, the difference of a couple tenths of a point is not as important. VA loans are perfect for eligible veterans, and are an excellent choice no matter how good or bad the economy is. VA loans feature many valuable benefits, making them better than traditional loans, to include the following:
· No need for down payment;
· 100% refinancing of existing mortgages;
· No PMI required;
· No penalties for prepayment;
· Generous loan amounts of up to $417,000, and even higher in some states;
· Streamline program eligibility.
No Need to Worry About Rates with Refinancing Options
Another important factor veterans should consider is that Streamline program allows refinancing at a lower rate any time the rates go down. Refinancing is quick and easy, as many bureaucratic procedures are waived, and allows for further money saving. If you are eligible for a VA loan and are looking to purchase or refinance, it is time to act while the rates are at historic minimum. If your concern is that rates may go down in the nearest future, then you do not need to worry, as you may be able to refinance any time with most appraisal and qualifying requirements waived under Streamline refinance program. All you need to show is the history of making timely mortgage payments.
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