At the time of this writing, it’s a buyer’s market, so we aren’t seeing a whole lot of sellers who are taking on the closing costs of their home sale. In a seller’s market, it’s a standard concession in the process of selling their home. But with the lower VA loan rate, there is some “wiggle room” with how to use a slight increase in the interest rate to the buyer’s advantage.
In the lender’s rate stack, you can use that increase to roll in the closing costs. It’s changed a bit since COVID has come into the picture, with the secondary markets changing slightly, too. But it’s always been possible for the lender to increase the interest rate to pay closing costs for loans, and even more so on a VA loan.
So the base interest rates start out lower and you can buy down the rate too, meaning you could go from 2.75% (for example) to 2.25% in today’s scenario. (Also called purchasing points.) It can be an expensive proposition in a conventional loan.
So, if you’re really looking to not expend your cash on closing, have the lender increase your interest rate somewhat to roll in your closing costs. This may only slightly raise your rate and you won’t have to give up the cash on hand to take care of it. Who knows, the economy may flip in the next year and suddenly it will be a seller’s market and they will be paying closing costs and more concessions to get their home sold. But today, you get to experience yet another advantage of a VA loan.
Want to learn more about how to use your VA loan to roll in closing costs? Get in touch with me here.