Virginia has plenty to offer, including universities, beaches and access to nearby Washington, D.C. Virginia lenders’ low mortgage rates also give you a great reason to consider buying a home in Old Dominion. You can ensure you get the best mortgage rate available on the home you buy — as long as you shop around. Here’s how to get started.
What is a Mortgage Rate?
A lender charges you a fee when you borrow money to buy a house, and that fee is known as interest. The loan you take out for a house is called a mortgage, so the interest you pay is referred to as a mortgage rate.
The rate you pay for interest on your mortgage will vary depending on a variety of factors. You can make sure you’re getting the best rate available to you as you shop around.
What Factors Impact Your Mortgage Rate?
It’s important to understand the rates you’re being quoted as you consider all the best mortgage companies available to Virginia borrowers. Here are some factors that impact the mortgage rate you’ll pay.
- Do your due diligence: It could cost you if you grab the first loan you’re offered. Even a fraction of a percentage point can save you money over the course of your time in your new home. It’s important to shop around and get quotes from multiple lenders before settling on one.
- Where you live: Mortgage rates can vary from one market to the next. You’ll find that you pay a different rate in Virginia than you would in another state, even if you’re using a lender with a national presence.
- Your home purchase: The home you plan to buy will have an impact on the interest you’ll pay. You’ll pay more in interest if your home purchase is especially expensive or it’s a second home. But you can usually leverage a great deal if you buy a modest home to serve as your primary residence.
- Your background: Lenders will pull your credit score for pre-approval. Once you’ve accepted an offer, your full credit report will be reviewed. Let’s say you’ve had late payments and collections in your past. You may find it tough to find a lender who will accept the risk. In this case, lenders who will accept you may charge a higher mortgage rate.
- Your financial situation: There are a few ways your current finances impact your interest rate. First, lenders will expect you to put at least 3% down at closing. The more you can put down, the more confidence your lender will have, which will be reflected in the rate you’re quoted. Your lender will also look at the amount of money you have in reserves. Note: It’ll boost lenders’ confidence if you have money set aside to cover your mortgage for a few months if you happen to lose your income.
- The economy: One thing that isn’t within your control is the general economy. Inflation can affect interest rates as well as the rates other lenders charge. Sometimes you’ll see mortgage rates rise as the economy thrives. Don’t rule out buying a house when the economy is tough — sometimes lenders drop interest rates in order to stimulate activity.
What is a Mortgage Type?
The type of mortgage you choose also influences the rate you’ll pay. Here are the top loan types.
You’ll likely see this rate advertised most often. Conventional loans aren’t backed by the government, so they may not give you the best rate. Let’s say you have a good credit score and a hefty down payment — you may save money with this option.
Put down 20% or more and you won’t have to pay for private mortgage insurance (PMI), which is a monthly payment you make to protect the lender in case you default on your loan. That amount can add up over time.
The government backs loans issued between lenders and borrowers through the Federal Housing Administration. This extra insurance gives lenders a little more leeway when they loan money to those with slightly lower credit or insufficient funds for a big down payment. See the best FHA lenders this year.
The federal government wants homebuying to remain strong outside of major metropolitan areas. They back loans through the U.S. Department of Agriculture in case you want to buy a home in a non-urban area.
Loans backed by the Veterans Administration are limited to former and current military members and their families. These loans provide competitive interest rates and require no down payment. Check out the best VA mortgage lenders and rates.
What is a Mortgage Term?
Whether you’re shopping around for a purchase or refinance quote, you’ll choose between different loan term types. Here are the most common:
- 30-year fixed: This loan locks in a fixed interest rate with payments stretched over 30 years. Your monthly payments are lower with shorter terms compared to longer-term loans but you’ll also pay a higher interest rate.
- 15-year fixed: Go with a shorter-term loan like a 15-year mortgage if you want a more competitive interest rate. Your monthly payment will be higher, but you can get a better deal on interest.
- 5/1 ARM: An adjustable-rate mortgage is a mortgage that offers an interest rate that changes. A 5/1 ARM gives you a low fixed interest rate for the first 5 years, which allows you time to increase your income before it adjusts to the lender’s current interest rate.
Current Mortgage Rates in Virginia
Mortgage rates don’t remain fixed forever. Lenders take a look at the market and adjust their base interest rates on a regular basis. This means the rate you’re quoted one day can change. Your rate will typically be locked in until you close once you’ve chosen a lender, which means you won’t be affected by fluctuations. It can help to keep an eye on the average interest rates in your state. We make every attempt to update the Virginia mortgage rates as frequently as possible.
Calculating Interest in VA
Your lender won’t charge you a fixed percentage of the total you borrow every month. Your interest will be calculated using a process called amortization. Amortization means that your interest is calculated based on the amount that remains on the loan each month.
This is why lenders for first time buyers will often steer borrowers toward FHA loans, which can offer a lower interest rate. Every little amount you can save on that rate can pay off long term.
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Lender Credit Score Minimums in VA
Your credit score serves as a direct reflection of your borrowing history. Let’s say you’ve paid your bills late or skipped out on some payments. You’ll see a lower score. Lenders prefer to see scores that are at least in the 600s. Let’s say your score falls in the high 500s. You may qualify for a government-backed loan or through a smaller lender with more lenient qualification requirements.
Best Mortgage Lenders in Virginia
Achieving a low interest rate starts with finding the right lender. Here are our 5 favorite lenders that can help you start your search.
1. Best for Customer Service: Keller Mortgage
Keller Mortgage can connect you with the type of borrowing experience you prefer.
You can interact in person or online and get help whenever you need it. Keller’s ZeroPlus loan can offer you a home with no down payment, $1,000 toward 3rd-party closing costs and a $1,000 credit toward closing costs on home purchases of $150,000 and up.
2. Best for Fast Turnaround: Quicken Loans®
Speed and convenience is Quicken Loans’ specialty.
From the time you request your purchase quote to the date and location you choose for your closing, the entire process is geared toward making things easier.
Quicken Loans® prices lenders online to find the best loan to meet your own unique needs and increases the chances you’ll get a competitive rate.
3. Best for VA Loans: Veterans United
If you’ve logged some time in the military, Veterans United’s loans will likely be the best deal. Unlike other veteran-marketed loan programs, Veterans United only accepts active duty and veteran military members.
In addition to no-down-payment loans, you’ll also eliminate the private mortgage insurance you’ll have to pay with other mortgages.
Veterans United is also more forgiving of lower credit scores. Interest rates are lower than average.
4. Best for FHA Loans: Atlantic Union Bank
Atlantic Union prioritizes customer service.
You’ll find branches across the state and branches and ATMs in nearby states.
Atlantic Union offers a wide range of mortgage options, including FHA loans. Atlantic Union works with you to determine the best choice for your purchase.
5. Best for First Time Homebuyers: Village Bank Mortgage
Village Bank Mortgage should be part of your research if you’re a first time homebuyer or you simply need a little assistance.
Village Bank is a Virginia Housing Development Authority-approved lender, which means you may qualify for down payment assistance through Village Bank.
Village Bank also offers government-backed options like FHA and USDA loans as well as VA loans.
6. CrossCountry Mortgage: Best for Self-Employed
CrossCountry Mortgage makes it easy for all types of home buyers to get approved for a mortgage. Their flexible requirements can help you get financing, with no employment or income verification and no minimum DTI. CrossCountry Mortgage offers traditional loan terms, as well as more flexible home payment plans with their 40-year loan program.
It's also easier to get approved if you're self-employed. Tax returns are not required and you'll only need one year of self-employment income history and a minimum credit score of 580. CrossCountry Mortgage can also help you get approved on assets alone, like your bank statements, stocks and bonds, or retirement accounts.
Get the Best Mortgage Rate in Virginia
Virginia is a great place to live, work and play, thanks to great schools and a thriving economy. As you can see, it’s important to research lenders to make sure you’re getting the best deal as you purchase a home in Virginia. Pick a few and compare and you’ll be sure to choose the best of the best.
Get Ready for Take Off
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