For those eligible, a VA loan can change everything by helping get you and your family into your dream home with ease. Whether you are an American veteran, active U.S. military member, reservist, or a surviving spouse, utilizing a VA loan or a mortgage loan guaranteed by the United States Department of Veterans Affairs is a great way to take advantage of benefits provided by the VA.
Since this program has been introduced in the United States, millions of Americans have been able to purchase homes with the help of the VA. This program was developed to help create an easy path to homeownership for active or former service members and their families. These loans can help in a variety of ways including purchasing, maintaining, remodeling, repairing, or adapting a home to a family’s specific needs.
While the VA does not originate loans, they set the rules for those who are eligible along with providing guidelines or requirements under which mortgages can be offered.
If you qualify for a VA loan, it might be the right time to explore the many benefits of getting this type of loan, to see how it can help your family now and in years to come.
How To Know If You Qualify?
While it is easy to apply for these benefits through the VA, it is important to know if you are eligible by making sure you meet at least one of the following criteria:
- Served 90 consecutive active service days during a time of war
- Served 181 days of active service during peacetime
- Served 6 years in the Selected Reserve or National Guard
- Spouse of a service member that died in the line of duty or due to a service-related condition
- Spouse of a POW (prisoner of war) or a member of the military who went MIA (missing in action)
What are the Benefits of VA Loans?
If you’ve been curious how a VA loan can help you and your family, there are plenty of benefits that come along with making this decision.
VA Loans Require No Money Down
A huge benefit of VA mortgage loans is that they require no money down. In most cases, a down payment will be necessary, but with this type of loan, it is not required. This means that you can purchase a home a lot easier when compared to the average buyer, especially if you are buying your first home.
Borrowers Can Benefit by Making a Down Payment
If you are applying for a VA mortgage loan and you are financially able to make a downpayment, and you are required to pay a loan funding fee – making a down payment can benefit you in many ways down the road.
A down payment can help to reduce the amount of the fee based on the percent put down. Plus, by paying 5% or 10% voluntarily, you will be able to lower the overall cost of your loan over time.
Qualifying Service Members Require No VA Loan Funding Fee
If you are a borrower who receives or is eligible to receive VA compensation for service-related disabilities, you may be exempt from paying the funding fee on your loan. This will not only help lower costs but help you keep your family safe and sound with ease.
With the advantage of no money down, no down payment, or a funding fee, it has never been easier to find a place for you and your family to live.
No Mortgage Insurance Necessary
When dealing with a conventional loan lender, you will be required to pay mortgage insurance premiums, if you don’t make a 20% down payment. But, with a VA mortgage loan, you will not be subject to paying mortgage insurance.
With a VA loan, the mortgage is being insured by the federal government, which reduces the risk of loss for the lender. This will help to shield lenders against losses that result from veterans not having the ability to make a mortgage payment or form a foreclosure.
Lower Closing Costs
When buying a home, closing costs can add up quickly but if you are using a VA loan to make your purchase, there are certain fees that a lender, broker, or agent cannot charge you. For example, a lender cannot charge you for attorney fees, commission, a brokerage fee, or make itemized charges from an appraisal.
Instead, the lender must cover these charges as a part of the 1% maximum flat fee.
Lower Interest Rates
VA mortgage loans often have below-average interest rates when compared to the rest of the market. If you are eligible, you may be able to get 0.5% to 1% lower rates than others looking to purchase a home. While this change may not seem significant at first, this can help save you hundreds of dollars over the year and thousands as you pay off your loan over time.
With this kind of mortgage rate, it will be easier to pay off your debt earlier and make fewer monthly payments as well.
VA Loans are Flexible
The VA allows veterans to buy various properties with different kinds of financing options available to them depending on what works best for their living situation. Whether it makes sense to purchase a conventional home, condominium, a manufactured home, build your own, or add new features to your current home – there are plenty of options available for whatever your family needs.
Leniency with Past Financial Troubles
In most cases, lenders will institute waiting periods or restrictions if someone has filed for bankruptcy or foreclosure in the past, but with a VA loan, the wait time is a lot shorter.
Since the VA program was developed to help service members and former service members purchase homes, even if you have had financial trouble in the past, the government will still guarantee you part of a loan.
Refinancing Options are Available
Certain qualifying service members can use a VA loan to refinance their homes. The VA permits Interest Rate Reduction Refinancing Loans which are similar to streamlined refinancing, which can help to lower interest rates along with the cost of month-to-month mortgage payments.
The VA version of a streamlined refinance is for existing VA mortgages, but there is an option to apply a refinance to a non-VA mortgage with a cash-out or a no cash loan.
No Limits on Loans
The VA does not place any limitations on the amount of a loan. However, the lender can determine how much they are willing to offer the borrower.
Generally, most VA loans are about $200,000 or so, but lenders will usually decide how much to loan the borrower based on the applicant’s credit history, income, and assets. All of this information will be provided in your application, helping lenders decide how they can help you best,
Utilizing VA Loans
Whether you are currently serving in the United States military, you’re an American veteran, a reservist, or a spouse of a former service member – a VA loan may be able to help you and your family settle into a space you can call home.
Even if you have had financial troubles in the past or worry about paying off your loan, many benefits can make getting a VA loan worthwhile. By lowering interest rates, not worrying about mortgage insurance, lowering closing costs, having more flexibility with your loan, and the chance to move into a new space without a down payment – there has never been a better time to take advantage of the benefits that come along with a VA loan.