If you could wave a magic wand and get the best VA lender available, you probably would. Buying a house is an enormous financial commitment, so it’s essential to make sure the person you trust with the financial part of this transaction knows what they’re doing and wants the best for you.
How to find the best VA mortgage lender in 2020
If and until technology catches up, the only magic wand is you. So identifying the best VA lender from a large pool of banks, credit unions and online lenders will take some digging. The first step is to know what makes a good VA lender.
Because VA mortgages are specialized home loans, it’s important that the lender has experience issuing these loans, understands how they work and knows what’s required.
First, let’s go over why a VA loan makes sense for some service members and veterans.
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 mortgages.
According to Ginnie Mae, VA loans have steadily increased since 2009. Ten years ago, VA loans made up 16.2 percent of Ginnie Mae’s loans, in 2019 that number was 42 percent.
Some of the benefits of a VA loan include:
- No down payment requirements.
- There are no limits on how much you can finance.
- There are no PMI requirements.
For eligibility requirements and new VA rules as of 2020, you can learn more here.
3 ways to find the best VA lender
Before you find a good lender, you have to identify what makes one good. The three things most borrowers should look for in a lender are:
- Excellent recommendations
- Ample experience
- Competitive rates (that’s APR not just the mortgage interest rate)
1. Crowdsource lender recommendations
A good place to start is with recommendations from friends and colleagues, especially those who have gotten VA loans. Social media can be a handy tool in getting a list of names fast.
Ask your friends what the 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.
Compile a list of those lender recommendations. If more than a few people recommend the same lender, odds are it’s a worthy lead. Once you have your list, you can see how they measure up to the next two yardsticks: experience and cost. From there, you can whittle down your list until you find the lender that makes sense for you.
2. Seek out 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, and experience can be an invaluable asset on both fronts.
The more people lenders work with and the more scenarios they encounter, the better equipped they are to have answers for a variety of problems.
Find out how long the lender has been licensed and how many mortgages they issue per year. If you have special circumstances or want a certain interest rate, ask them how they can help you. Usually, someone with experience can give a few solutions to your problems.
Don’t be distracted by a big brand — behind those household names are just individual people. So 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 price shop to find the best VA loan rate
Mortgage rates and costs vary by lender, so it’s important to do your homework before you lock in a rate. In fact, a Freddie Mac report showed that people who comparison shopped for mortgages saved money versus those who didn’t shop around.
Borrowers with a $250,000 mortgage saved about $1,435 over the life of the loan when they got one extra mortgage quote. And those who racked up five rate quotes saved between $2,089 and $3,904. The lesson here is that it pays to do your research.
Be sure to get the APR, not just the mortgage rate. The APR is the total cost of the loan, including all the lender fees. You can learn more about APR here.