While veterans day is a long time away from now, last year marked the 70th anniversary of the G.I. Bill. If you are a veteran in the market for a new home I want to remind you about the awesome benefits of a VA mortgage. Veterans Administration loans carry several key advantages that you would be hard pressed to find elsewhere. We reached out to John Vergos, with Installment Loans Hub to get some insight into how these loans work in conjunction with other home loans, personal loans and consumer lending products. Some of the key advantages are as follows:
Lower interest rates:
You will on average pay .60 % lower interest than the national average for someone with the same credit score as you. While this may not seem like a huge amount, over the course of a 30 year fixed loan this could save you thousands of dollars over time. It will also result in a lower monthly payment freeing up precious cash flow that you could divert elsewhere.
Did you know that VA loans do not require any down payment? As long as the loan amount does not exceed the homes appraised value. I know of some who got a deal on the purchase price but had the mortgage amount higher yet lower than the appraised value and walked away with an extra $5000 to $10,000 that they then used to upgrade their new home.You can even obtain a loan with no money down, provided that the loan amount does not exceed $417,000 (for 2014).
Home Owners Insurance:
You do not need private mortgage insurance on loans of more than 80% of a homes appraised value. This can save the average veteran between $100 and $120 per month.
Your closing costs will often be lower with a VA loan. The reason being is the government limits these costs when the loan is a VA loan. Any VA backed loan has very strict limits in place for closing costs. For those new to real estate transactions closing costs can be quite high so this perk is well worth having.
You are not pigeon holed into a minimum credit score with a VA loan. If you had thought your average or below average credit would be a barrier to home ownership this is not the case if you opt to go for a VA backed loan.
Early Loan Payoff:
Many loans may have penalties associated with paying off your loan early. This is not the case when it comes to a VA backed loan. If you decide you want to pay off your mortgage ahead of schedule you can do so when you have a VA loan.
You can also refinance your home through the VA at nearly any point, receiving a loan based on the equity you already have in your home. This money can be used for any purpose though most use it for repairs or expansion. The rates that can be had through a VA refinance are quite attractive.
The only real downside to a VA loan is well your dealing with the government. There is red tape involved and this red tape can extend the process of obtaining your loan by several weeks. I should however point out that despite having to wait a few extra weeks the loans benefits make this wait well worth the wait. Indeed you would be hard pressed to find a better loan elsewhere. In fact the VA has served over 21 million loans to date, which speaks volumes on how popular VA home loans are.
The VA does not make the loans to you directly. Instead the VA will partially guarantee your mortgage or refinancing through private lenders. This allows lenders to offer you better terms than the standard terms you would find elsewhere. VA backed loans are only allowed for your primary residence, investment or vacation properties are not elgiable for a VA backed loan.