Change Date

September 15, 2004, Change 4

This section has been changed to create subsection lettering..

a. Requirement

VA no longer prescribes interest rates for VA guaranteed loans.  The interest rate is negotiated between the veteran-borrower and the lender to allow the  veteran to obtain the best available rate.

b. Changes to the Agreed Upon Interest Rate

The lender and borrower are expected to honor any lock-in or other agreements they have entered into which impact the interest rate on the loan.  VA does not object to changes in the agreed upon rate, as long as no lender/borrower agreements are violated.  The following procedures apply in such cases.

Any increase in the interest rate of more than one percent requires

·   re-underwriting to ascertain the veteran’s continued ability to qualify for the loan

·   documentation of the change, and

·   a new or corrected URLA with any corrections initialed and dated by the borrower.

Reference:  For prior approval loans, see section 4 of chapter 5.