There are many different loan options out there that you are able to choose from. Some will be best for those with low income or a low down payment amount, while others are designed to save the homeowner as much as possible. One type of loan that you may want to consider is the VA loan.
Before you go out and apply for this kind of loan, you must remember that this loan type is designed for veterans or active duty members of the military. If you meet this criteria, there are a lot of benefits to choosing to get a VA home loan for your needs. Some of the benefits include:
Doesn’t Require a Down Payment
One of the best benefits of going with the VA home loan is that it does not require a down payment. While other mortgage programs are going to ask that you put down a 5% down payment or more, the VA home loan does not have this requirement for qualified members, which will make this more affordable.
New home purchases are close to an all-time high throughout the nation, though some areas tend to be worse than the others. Finding the right home that fits your budget for a down payment will take too much time and they will miss getting into that home in the first place.
With the VA home loan, you will be able to get into the home without draining your savings because a down payment is not required. You will have to pay more on the home loan without this, but you can get into the home right now, rather than waiting it out.
No Need for Mortgage Insurance
For other types of loans, if you are not able to put down 20% for a down payment, you will have to pay mortgage insurance for some time. This can add up quickly and is extra that you need to pay on your payment from one month to the next.
This type of mortgage insurance is going to show up on most loan products that you go with including conventional loans below 20%, USDA, and FHA. It is different with the VA loan though. You do not have to come up with a large down payment and you will not need to pay the mortgage insurance either. This is the only type of loan that provides that option.
Takes Lower Credit
Many mortgage lenders require a higher credit score before they will give the loan out at all. While you will find that a higher credit score is important and can help you, the VA home loan will take lower credit scores than some of the other types of loans.
Many VA home loans will not need to keep up with some of the industry standards when it comes to the credit score that they will take. There are many who will have less than perfect credit who can get the VA home loan. Other banks and mortgage products will require you to have a minimum of 620 FICO score before even taking a look.
This is not a rule that the VA home loan will need to follow. This is a private lender rule that other buyers have to follow. For many home loans through the VA program, the minimum FICO score is not that important and is often not looked at all. Talk to a lender about getting the VA home loan, even if you are worried about your credit score.
Lower Interest Rates
When you choose to go with a VA loan, you will find that the interest rate attached to the loan is lower than that of a conventional loan. This is a huge benefit that can save you thousands of dollars over the lifetime of your loan as well.
Home buyers should still shop around to get the best rate for their new home. This will ensure that they never pay more for the rate on their home than they need. There are several lenders who will provide these VA home loans, so ask each of them, as close together as possible, about their loan products to see which one is right for you.
A simple reduction in closing costs will help save you a lot of money. When you are looking at a loan large enough to pay for a home, even half a percentage point will be a big relief and could save you thousands when it comes to paying off the loan, making the home more affordable for those who qualify for the VA home loan.
Closing Cost Reduction
Sometimes you can get a reduction in your closing costs when you choose a VA home loan compared to a conventional one. This isn’t always the case, but you can shop around and get fewer closing costs, which can save you money.
One example of this is that with a VA home loan, the seller is able to cover 4% of the closing costs for the buyer, something that is not allowed with a conventional loan. There are also a few non-allowed closing costs on the VA home loan, ones that are allowed with a traditional mortgage. Some of these will include:
- Some inspection fees
- Notary fees
- Signing fees
- Attorney fees
- Escrow fees
Veteran’s can’t be charged for these fees if they do a VA home loan. But they can be charged for them through a conventional loan. Working with the right loan will make a big difference and can help save you money when you don’t need to bring as much to closing with you. You can check out themortgagereports.com article to know more about cost reduction for veterans.
Choosing to Get a VA Loan
While there are many great mortgage loan options on the market for home buyers to choose, if you qualify, the VA home loan is one of the best choices to go with. Take a look at some of the benefits of this home loan program to see if it is the right one for you.