2009 Real Estate Guide
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Today's mortgages: back to the future

Not all VA loans are created equal, though. Because underwriting standards will vary from institution to institution, it pays to shop around several venues. In some cases, it can be the difference between being approved at all, while in others, shopping will simply net a better deal.

The process of getting VA loans used to be slow, says Frueh. These days, vets or lenders can go online to get their certificates of eligibility, and the rest of the process "is consistent with a conventional loan," he says.

So who's the best candidate? Anyone who's eligible, says Frueh, including active service members and past service members who received other than a dishonorable discharge. Un-remarried widows and widowers of those killed in the service can also qualify. For more details on eligibility, visit the Veterans Administration Web site.

Adjustable rates may not be the popular favorite, but they are still available. "People are still using them," says Mechem, who estimates ARM loans make up about 2 percent of the mortgage market. "It's a very different business than it was five years ago."

The more popular adjustable options these days, not surprisingly, have a longer fixed-rate period, Mechem says. While the subprime heyday saw loans that switched over after two or three years, today's ARM borrowers are focusing on mortgages that have a fixed rate for five to 10 years, Mechem says.

"It's a more traditional product," he says. "Borrowers have a longer term outlook."

And, just in case selling or refinancing isn't an option, it's not a good choice for anyone who can't shoulder escalating payments down the line, he says.

To see overnight mortgage interest rates in your local area, visit Bankrate's Overnight Averages.

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