If you’re thinking of refinancing your VA home loan, you’re no doubt following interest rates. And why not, that’s the point, right? VA mortgage rates have been hovering in this range for quite an extended time, something really not seen in our lifetime. 30 year mortgage rates hit an historic low of around3.50 percent in January of 2013 and while rates have moved higher since then the move has been slight, with rates near 4.25 percent, still low by historical standards.
But paying attention to the VA mortgage rate really may not be your best move. Of course the rate is important but you need to look more at what the rate really stands for and that’s your monthly payment. An interest rate will have a greater impact on larger loan amounts compared to smaller ones. And since a refinance can have closing costs, while the rate drop is important what’s even more important is how far your mortgage payment will drop compared to the closing costs involved with the VA loan.
Don’t worry about a 1/8th percent change or a ¼ percent drop, but instead compare what your payments will be each month. When watching interest rates, make sure you understand what the impact will be at each move and memorize those payments. It won’t take long but get your monthly payment from your loan officer for say 4.00, 4.125, 4.25, 4.375 and so on and understand what that rate will mean. Otherwise, you won’t truly know the impact.