VA LOAN CAPTAIN BLOG & Learning Center

Don’t Play the VA Rate Game

By: Grant Moon 07/08/13 11:40 am

Don’t Play the VA Rate Game

Over the year and a half, and gradually over the past five years, VA interest rates have steadily fallen. From a high of around 6.00 percent to rates below 3.00, this precipitous drop is good news for borrowers but reflects an economy in the doldrums for an extended period of time. Yes, rates are low, but the reason they’re low is because the Fed has to keep pumping borrowed money into the economy.

Falling rates and along with the constant drumming of “historic low rate” advertisements, consumers can get somewhat immune to the noise and perhaps get fooled into thinking that not only will rates stay this low forever but will probably fall further just like they’ve been doing. But that’s not a good approach if you have a VA purchase or refinance loan in the works and you haven’t locked in your rate. Some however think they can play the VA rate game and lock in the rate at the perfect moment. But that’s not really the prudent choice.

Mortgage rates can change daily and sometimes during volatile trading sessions, even more than once during a single business day. Sometimes rates can change by more than one-quarter of a percent or even more in one day. And when investors begin to see a trend and see that rates overall are on the horizon, the rate frenzy will begin and you can say “bye-bye” to these current low rates. When mortgage rates decide to go up, they can sometimes literally zoom!

So what are rates today? Say they’re 4.00 percent, is that a good rate? You bet. No, it’s not the absolute lowest rate ever but you can see it from there. Historically, 4.00 percent is nearly unheard of but we’re all human and it’s not uncommon to wait things out, hoping rates will drop further. But what if they don’t? What if rates begin to climb and you lost that 4.00 rate forever? Don’t play the rate game. What’s that old saying, “A bird in the hand…

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