For eligible military members, veterans and their spouses, a VA loan is a low-cost financing option that can make it easier to buy a home or refinance a mortgage. This type of loan has some universal requirements, but mortgage lenders set their own rates, so it pays to comparison-shop to get the best deal.
Many lenders offer VA loans, and some even specialize in them. Here’s how to get started finding the best VA lender for you.
How to find the best VA mortgage lender in 2021
Identifying the best VA lender from a large pool of banks, credit unions and online lenders takes some digging. The first step is to know what makes for a good VA lender. The three factors most borrowers should consider when choosing a lender are:
- Excellent recommendations
- Ample experience
- Competitive rates (the APR, not just the interest rate)
1. Crowdsource VA lender recommendations
A good place to start is with recommendations from family, friends and colleagues, especially those who have gotten a VA loan in the past. Social media can be a handy way to get a short list of lenders quickly.
Ask your referrers what their experience was like. Was it a smooth process? Was the lender able to answer their questions? If they don’t mind disclosing the lender fees, getting the cost of the loan is also useful information to have. If more than a few people recommend the same lender, odds are it’s a worthy lead.
You can also research online for high-rated VA mortgage lenders, and peruse third-party reviews and testimonials. (Here are Bankrate’s picks for the best VA mortgage lenders in 2021.)
Once you’ve asked around, done your homework and have your list, you can see how each measure up to the next two yardsticks: experience and cost. From there, you can whittle down your list until you find the lender that meets your needs and preferences.
2. Seek out VA lenders with experience
VA lenders need to understand specific requirements as well as be able to guide borrowers in choosing the best mortgage for their financial situation. Experience can be an invaluable asset on both fronts. The more borrowers a lender works with and the more scenarios the lender encounters, the better equipped it is to have answers for a variety of problems.
Find out how long the VA lender has been licensed and how many mortgages they issue per year. If you have special circumstances or want a certain interest rate, ask the lender how they can help. Usually, a lender with experience can offer a few solutions.
Don’t be distracted by a big brand — behind those household names are just individual people. Although a certain bank has been in business for 50 years, the person helping you with your loan might have a little or a lot of experience. Some borrowers, especially those who have had multiple mortgages, might not rely on a lender’s experience to help them through the process, so lack of experience isn’t necessarily unsuitable for everyone.
3. Comparison-shop to find the best VA loan rate
Mortgage rates and costs vary by VA lender, so it’s important to do your research before you lock in a rate. In fact, a 2018 Freddie Mac report revealed that borrowers who comparison shopped for mortgages saved money versus those who didn’t – about $1,435 on a $250,000 loan when they got one extra rate quote, and up to about $3,900 with five quotes.
Be sure to get the APR, or annual percentage rate, not just the interest rate. The APR is the total cost of the loan, including all the lender fees, and is typically a better basis for comparison than just the mortgage rate.
Why get a VA loan?
VA mortgages are more popular than ever, thanks to low down-payment requirements and less-stringent eligibility criteria than conventional loans. Some of the benefits of a VA loan include:
- There is no down payment requirement.
- There are no limits on how much you can finance.
- There is no mortgage insurance requirement.
Here are all of the VA loan eligibility requirements and rules as of 2021.