VA Equity Loan Rates and Options

VA equity loan rates can be a game-changer for homeowners who want to tap into their home's value without selling.

VA equity loans offer a competitive interest rate, often around 5-7% APR, which is lower than what you'd find with a traditional home equity loan.

You can borrow up to 100% of your home's value, minus any outstanding mortgage balance, with a VA equity loan.

This means you can use the loan to pay off high-interest debt, fund home renovations, or cover other expenses.

VA equity loan rates can be complex, but understanding the basics can save you money. VA loan rates tend to be lower than conventional loan rates, with a current 30-year VA loan rate of 6.21% compared to 7.33% for conventional loans.

To qualify for the best VA equity loan rates, you'll want to check your credit score, aiming for a score above 620. This will give you more options and lower interest rates. Shopping around is also crucial, as individual lenders can offer rates that vary by half a point or more.

Here are the key factors that determine VA loan rates:

National Mortgage Interest Rates play a significant role in determining the cost of your VA equity loan. The current national average 30-year VA mortgage interest rate is 6.50%, which is down compared to last week's rate of 6.73%.

The specific rate you're offered depends on several factors, including your individual credit and finances. This means that even if the national average rate is 6.50%, you might be offered a different rate based on your unique situation.

VA loan rates tend to be slightly lower than rates for other mortgage types, but this isn't always the case. Today's VA rates reflect the Federal Reserve's pivot to a cutting cycle after a stretch of higher rates that began in 2022.

Here are the key factors that determine VA loan rates:

You need to consider the total costs of a VA loan, not just the interest rate. This includes a funding fee that can push up your total loan costs.

A VA loan is a mortgage backed by the U.S. Department of Veterans Affairs, which provides extra protection for lenders.

The APR, or annual percentage rate, is a key factor in comparing interest rates, and you can find this information on Page 3 of your loan estimate.

If you default on your VA loan, the VA will pay your lender a portion of the outstanding loan balance, making VA loan requirements more flexible than conventional loans.

Veterans United doesn't offer home equity loans or HELOCs directly, but they can connect you with a trusted partner that offers these options.

If you're looking for a VA cash-out refinance, Veterans United is a good option. You can speak with one of their VA loan experts to discuss your options.

Here are some types of VA equity loans you can consider:

These options can help you tap into your home's equity and achieve your financial goals.

A Home Equity Line of Credit (HELOC) is a line of credit extended by a bank or financial institution that uses your home equity as collateral.

It won't impact your home loan term or rate, but it will create a second lien against your property.

HELOCs often have two phases – a draw period where you can tap into your home's equity and a repayment period, which together can last anywhere from 15 to 30 years.

Unlike a credit card, you'll need to pay back the money you borrow, with payments including principal and interest.

HELOC rates are often adjustable, which can make it harder to budget for the payments in the long term.

Funding longer-term home renovation projects can be a good investment if they increase your property's value.

In a true financial emergency, a HELOC can be a better option than higher-interest credit accounts.

Closing costs on a HELOC are usually lower than a refinance product.

You can no longer use the line of credit once the repayment period starts.

Veterans United offers VA cash-out refinances directly, but not home equity loans or HELOCs. They can, however, connect you with a trusted partner that offers these options.

If you're considering a VA loan, you're in luck because they're not one-size-fits-all. You can choose from different loan types and term lengths as well as between fixed- and adjustable-rate mortgages (ARMs) to fit your needs.

Here are some of the types of VA loans you can choose from:

Low upfront costs are a major advantage of VA equity loans. You likely won't need a down payment if you have full entitlement.

No mortgage insurance is another perk, meaning you won't pay any mortgage insurance, regardless of your down payment amount.

Capped loan costs are also a benefit, with your lender only able to charge you up to 1% of your loan amount in total fees.

You can have multiple VA loans and reuse your VA loan entitlement, making it a reusable option.

Competitive interest rates are typically available with VA equity loans, often on par with or lower than other common loan types.

VA fees are a drawback, as you may have to pay a VA funding fee of up to 3.30% of your loan amount.

Eligibility hurdles exist, requiring you to meet military service requirements to qualify.

An occupancy requirement means you can't use a VA equity loan to buy a second home or an investment property.

Stringent VA appraisal standards must be met for your home to be eligible for a VA equity loan.

A risk of going underwater exists, as you may later owe more than your home is worth if you roll the VA funding fee into your loan amount.