Clarksville Homebuyer Guide

Part 4 of the 5-part series “VA Loans: 100 Questions Answered” by Kate Matties-Deiboldt, Sr. Mortgage Advisor serving Clarksville, Fort Campbell & Montgomery County.

Overview

We focus on the closing process, occupancy requirements and interest rate considerations. Understanding these details helps you plan for settlement and long-term affordability in the Middle Tennessee market.

Questions 61-80

61. What closing costs do VA buyers pay?

Although there’s no down payment, VA buyers still pay closing costs, which may include loan origination fees, appraisal fees, title insurance, recording fees, prepaid taxes and homeowners insurance. Some costs may be paid by the seller or rolled into the loan with lender credits, but buyers should budget 2% to 5% of the loan amount.

62. Can the seller pay all of my closing costs?

The VA allows the seller to pay all of your normal closing costs (origination charges, appraisal, credit report, title, recording, survey). In addition, the seller can provide concessions up to 4% of the loan amount for things like paying your funding fee, prepaid taxes and insurance, or even paying off collections. Negotiating seller credits is part of the purchase contract.

63. What are prepaid expenses?

Prepaid expenses are future costs collected at closing, including homeowners insurance premiums, prepaid mortgage interest and initial escrow deposits for property taxes and insurance. These items ensure that your escrow account has enough funds to cover upcoming bills.

64. What is cash to close?

Cash to close is the total amount of money you need to bring to the settlement table after accounting for any earnest money deposit, down payment, closing costs, prepaid expenses, seller credits, lender credits and financing of the funding fee. Your lender will provide a Closing Disclosure three days before closing outlining your final cash to close.

65. When do I receive my Closing Disclosure?

The lender must provide a Closing Disclosure (CD) at least three business days before closing. The CD details your final loan terms, closing costs and cash to close. Review it carefully and ask questions if anything looks unfamiliar.

66. What is the minimum occupancy requirement for a VA loan?

You must intend to occupy the property as your primary residence within a reasonable period, typically 60 days. If you are deployed or on PCS orders, you may have a bit more flexibility, but the key is that the VA loan is for primary residences, not investment or second homes.

67. Can my spouse occupy the home if I’m deployed?

Yes. If you cannot occupy the home due to deployment, your spouse or dependent child may satisfy the occupancy requirement. You will need to document the situation with your lender.

68. What happens if I deploy after buying a home?

Deployment does not violate the occupancy requirement. Once you have fulfilled your intent to occupy the home, you can deploy or PCS without jeopardizing your VA loan. Many military families rent out their homes during deployment, and some lenders allow a property management contract to satisfy occupancy.

69. Can I rent my VA-financed home later on?

Yes. After meeting the occupancy requirement, you may convert your home to a rental property. There is no specific waiting period after initial occupancy, but you must have reasonably intended to live there initially. If you plan to buy another home using a VA loan, your remaining entitlement and DTI will be considered.

70. Can I buy a home with a VA loan if I plan to PCS soon?

Yes. Many buyers purchase homes near their current duty station and then move when PCS orders arrive. As long as you intend to live in the home initially, you can buy. Later, you may convert it to a rental or sell it, depending on your goals.

71. How are VA interest rates determined?

VA loans have competitive rates because the VA guaranty reduces risk for lenders. Rates are influenced by market conditions, your credit profile, loan term (30 vs. 15 years) and whether you pay discount points. VA rates are often comparable to or slightly better than conventional rates.

72. Are VA rates lower than conventional rates?

They often are. Because of the guaranty and lack of mortgage insurance, VA loans typically have rates equal to or slightly better than conventional loans. However, rates vary by lender and day-to-day market movements.

73. Can I buy discount points on a VA loan?

Yes. Discount points are optional fees you pay at closing to lower your interest rate. One point equals 1% of the loan amount. Buying points can make sense if you plan to keep the loan long enough to recoup the cost through lower monthly payments. Work with your lender to calculate the break-even point.

74. What is an APR, and why is it higher than my rate?

The Annual Percentage Rate (APR) reflects the total cost of borrowing, including your interest rate and certain fees. The APR is typically higher than the note rate because it factors in the funding fee and closing costs. Use APR to compare loan offers, but remember it doesn’t include all costs (like property taxes or homeowners insurance).

75. Can I lock my VA loan interest rate?

Yes. When you lock your rate, the lender guarantees that your rate won’t change for a certain period (often 30–60 days). Rate locks protect you from market volatility during the homebuying process. The lock period should extend through your expected closing date.

76. How long can I lock my rate?

Most lenders offer 30-, 45-, 60- and 90-day locks. Longer lock periods may cost more. Some lenders offer float-down options if rates drop before closing. Discuss timing with your lender.

77. What factors affect my VA interest rate?

Your rate depends on market conditions, your credit score, loan amount, term length, whether you pay points, and whether it’s your first or subsequent use of VA benefits. Lenders may also adjust pricing based on property type and occupancy (single-family vs. multi-unit).

78. Should I choose a fixed-rate or adjustable-rate VA loan?

Most borrowers prefer fixed-rate VA loans for stability. Adjustable-rate mortgages (ARMs) often start with lower rates but can adjust up or down after a specified period. ARMs may be suitable if you plan to sell or refinance before the adjustment period. Discuss options with your lender.

79. Can I refinance my VA loan to get a lower rate?

Yes. The VA offers the Interest Rate Reduction Refinance Loan (IRRRL), also known as a VA Streamline Refinance. It allows you to refinance to a lower rate with minimal paperwork and no appraisal in many cases. You can also do a VA cash-out refinance to tap equity or convert a non-VA loan to a VA loan.

80. What if rates fall after I close?

You can refinance using an IRRRL to take advantage of lower rates. You’ll need to consider closing costs and your remaining loan term to decide if refinancing makes sense. Some lenders offer float-down options before closing if rates drop during the lock period.

---

About the Author: Kate Matties-Deiboldt is a Senior Mortgage Advisor and Branch Manager with VanDyk Mortgage (NMLS #18487), serving Clarksville, Fort Campbell, Montgomery County, and Middle Tennessee. She has 26+ years of experience helping military families, first-time buyers, and clients who’ve been told “no” before.