Home Purchase Most Popular Articles

VA Loan Resources

  • Girl with space shuttle toy
    Data Suggests VA Loan Qualifying isn’t Rocket Science
    Veterans First Mortgage ®
    When it comes to getting approved, VA-eligible borrowers may currently have a slight edge.
  • Home Loans
    VA Loan Guide
    The VA program is one of the few remaining no-down payment programs in the market. Learn all about using your VA loan benefit.
  • Serviceman and son
    Understanding VA Home Loan Requirements
    Navy Federal Credit Union
    If you’re looking to buy, refinance or remodel your home, then be sure to review VA home loan requirements to see if you qualify.
  • VA home loan. Getty Images
    VA Home Loan: Do You Have What it Takes?
    There are five categories for eligibility. Your eligibility is based on you military service. Do you meet the criteria?
  • Family playing in yard
    5 Reasons to Live Off Base
    There are a lot of factors that play into your decision on whether to live inside or outside the base gates, and there's no bla...
  • Printout of a credit report
    Starting the Loan Application Process
    Once you've determined that you are eligible for a VA home loan, you can begin the loan application process, which includes six...
  • US Map Showing High Cost Counties
    VA Loan Limits for High-Cost Counties: Updated for 2017
    The VA loan limit for 2017 is $424,100. But it could actually be substantially more if you buy a home in a high-cost county. Se...
  • Couple looking at tablet
    How to PCS in a Hurry
    In a perfect world, military families get orders to their new locations months before the report date. In reality, things are h...
  • Family outside suburban house.
    VA Financing & Mortgages Options
    The VA guarantees a variety of home loans. There are two basic types of loans with two additional options that are appealing to...
  • gray home
    What Is a VA Guaranteed Home Loan?
    If you want to purchase or refinance a home, condominium or manufactured home, the VA can guarantee up to $417,000 of the total...
  • Home buying. Getty Images
    Top 3 VA Home Loan Tips
    We've scoured the Internet to find the three most helpful tips to help you take advantage of this exclusive benefit.
  • Business writing
    VA Loan Forms
    In order to receive your Certificate of Eligibility for VA loan benefits, you will need to submit your request for a Certificat...
  • big gray house
    6 Unbeatable Benefits of VA Loans
    Veterans United Home Loans|
    Here's a look at six of the biggest, most unbeatable benefits of the VA home loan.

Mortgages That Are Cheaper Than Dirt

I would say that anything lower than the prevailing prime rate is cheaper than dirt. The real question is, how much cheaper can you go? The Fed keeps nudging the discount rate, which has a direct bearing on the prime and other rates upon which we loan our money. It's a bit of a moving target. Today the prime rate is 5.75%. If you can beat prime, you're a winner. Here are two tactics to win a loan on your house that's dirt cheap.

1. Option Arm

How does a mortgage rate of 1% sound? There are loans out there with 1% rate for one whole year. Honest. To be sure, the rate is below the cost of the money that the lender pays and that difference is tacked onto the principle. But for that first year, you will be paying a light-as-a-feather 1% (Note that it will amortize so don't calculate your payment based upon interest only).

It works this way: each month when you receive your mortgage bill our coupon, you will have the choice (hence the use of the term "option") of paying at a rate that is 30 year fixed, or paying as an ARM fully amortizing, or paying as an ARM that is interest only, or paying a teaser start up rate of 1% (note that as the Fed continues to nudge, this start-up rate could inch up slightly).
After the first year, the loan has only three choices for the next four years. The lenders who offer this product have some subtle differences but these are the basics. The real advantages here are when you can forecast that money will be tight for that first year. This gives you breathing room. It also makes your life easier when it comes to amortizing the loan. Some months are easier than others. The downside is not really a downside if you are aware of it up front -- when you pay the 1% teaser rate, the difference between that rate and the true cost of the loan is added to the principle. But maybe that's just fine.

2. Buy Down

If you can pay for points, one of the best ways to win a loan that's dirt cheap is to buy the rate. You do this by actually paying the lender up front for the difference in rate that would stretch out for the rest of the loan. You can calculate the blessing here by first asking for a no-point loan on the terms you prefer. Then you go to the absolute bottom of the rate card held by the lender and request to see the points required to "buy" that rate. Divide the number of dollars in the points by the difference in rate in dollars and you have the break even point. It's usually about a third to a half of the way through the fixed period on the loan and it is a bargain.

And you thought this was some sort of trick! Both approaches should deliver loans that are below prime rate, probably interest only. It's really Simple Finance 101, and you should know all about these two strategies right away If either of these dirt-cheap loan offerings is puzzling, contact info@cmmtrust.com.

Military News App by Military.com

Download the new Military.com News App for Android on Google Play or for Apple devices on iTunes!

Featured VA Loan Articles