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  • 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.
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    VA Home Loan: Do You Have What it Takes?
    Military.com
    There are five categories for eligibility. Your eligibility is based on you military service. Do you meet the criteria?
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    Starting the Loan Application Process
    Military.com
    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 2017
    Military.com
    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...
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    VA Financing & Mortgages Options
    Military.com
    The VA guarantees a variety of home loans. There are two basic types of loans with two additional options that are appealing to...
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    IRRRL Facts for Veterans
    Military.com
    IRRRL stands for Interest Rate Reduction Refinancing Loan,also known as a "Streamline" or a "VA to VA" loan.
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    What Is a VA Guaranteed Home Loan?
    Military.com
    If you want to purchase or refinance a home, condominium or manufactured home, the VA can guarantee up to $417,000 of the total...
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    Top 3 VA Home Loan Tips
    Military.com
    We've scoured the Internet to find the 3 most helpful tips to help you take advantage of this exclusive benefit.
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    VA Loan Forms
    Military.com
    In order to receive your Certificate of Eligibility for VA loan benefits, you will need to submit your request for a Certificat...
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    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.

VA Loan Rate vs. APR

If you haven’t already seen it, you will soon; your Annual Percentage Rate, or APR. This number is one of the most confusing numbers on all the documents your lender provides and might also be the one number that your loan officer sometimes clumsily tries to explain. But really, the APR is quite simple when you understand the mechanics.

Some say that the APR is unimportant, that it’s just an insignificant number and to not pay any attention to it. But that’s only said by those who don’t understand its meaning. The Annual Percentage Rate is properly defined as “the cost of money borrowed, expressed as an annual rate.” That’s it. So what do you do with it? You use it to compare the same loan offering from competing lenders, in this instance a VA Loan from lender A and a VA loan from lender B.

The Note Rate is the first ingredient in the APR calculation. That’s the rate on which your monthly payment is based. If you have a loan amount of $100,000 on a 30 year fixed rate mortgage with a rate of 4.00 percent, your monthly payment is $477. Regardless of what your APR number might say, your payment is $477 with a 4.00 percent rate. So where does the APR come into play?

It comes into play when comparing two 4.00 percent 30 year loans from two different lenders. Both lenders can quote you the very same 4.00 percent rate on the same exact terms but the difference lies in certain closing costs associated with calculating the APR. A lender with lower closing costs will have a lower APR than a lender with higher fees.

Lender A’s quote of 4.00 percent with $5,000 worth of finance charges will show an APR of around 4.43 percent while Lender B may only have $2,000 of charges resulting in an APR of 4.17 percent. When lenders advertise their interest rates on the internet or in the newspaper, they are required by law to disclose not just the note rate, but the underlying APR as well.

This comparison only works when comparing mortgage offerings that are exactly alike with regards to note rate, term and loan type. You can’t compare a zero down VA loan with a 20 percent down conventional mortgage. It doesn’t work that way. But when used properly, the APR is an indicator as to which lender truly has the best offering.

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Featured VA Loan Articles

  • VA Loan Closing Costs: An Added Benefit
    Besides the advantage of requiring no down payment for qualified VA borrowers, there's also a distinct advantage for the borrow...
  • White suburban home.
    IRRRL Facts for Veterans
    Military.com
    IRRRL stands for Interest Rate Reduction Refinancing Loan,also known as a "Streamline" or a "VA to VA" loan.
  • US Map Showing High Cost Counties
    VA Loan Limits for High-Cost Counties 2017
    Military.com
    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...
  • Get the FAQs on VA Home Loans
    We've answered 16 of the most frequently asked VA Loan Benefit questions. View them now to get a quick understanding of your be...
  • Top 3 VA Home Loan Tips
    There are numerous advantages to having a VA mortgage. A VA mortgage loan can be guaranteed with no money down, in some cases u...
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