If you are a veteran, a personnel on active duty, a National Guard member, a reservist, or a surviving spouse of any of the aforementioned, then you can start thinking about getting you dream home by applying for a VA loan.
VA Loan Definition
A VA loan, although named as such, is not exactly a direct loan from the Department of Veterans Affairs. Instead, VA personal loans are coursed through private lenders like banks, mortgages, or savings and loans companies.
Benefits of a VA Loan
As opposed to applying for your loan through other means, getting VA personal loans has bigger benefits for those who are qualified. Here are some of them:
- No down payment. Those who qualify for a VA loan are not required to shell out any form of down payment. Of course, there are guidelines that apply before this rule is enforced. In case the property’s reasonable value is less than the purchase price, a down payment will still be applicable. Some lenders may also ask for a down payment depending on certain circumstances.
- Reasonable value. In applying for VA personal loans, the borrower is always given the figures for the property’s reasonable value. This will be helpful in gauging whether the property is worth investing in or not.
- Negotiable interest rates. Where other forms of loans have fixed interest rates, the rates that apply for a VA loan are usually negotiable depending on your capacity and the length of time that you need to pay for the entire amount.
- Financing the VA funding fee. VA loans give you the right to have your VA funding fee financed. You can also reduce the funding fee if you are capable of shelling out a 5% down payment. Exemptions also apply for veterans who are receiving VA compensation.
- Closing costs. The closing costs that come with your VA loan are comparable to that of regular personal and home loans. There may also be instances where the closing costs for your VA loan will come out smaller than other types of financing.
- Mortgage insurance. Unlike other forms of loans, the VA loan does not require any mortgage insurance before being approved. This means that you would have one less thing to worry about in terms of premiums.
- Right to prepay. Securing a VA loan would mean that you have the option to prepay without having to pay any penalties, which is something you would have to do with other kinds of loans.
- Warranty and cooperation from builder. The VA may opt to inspect the home while it is under construction. In this case, the VA can assure full cooperation of the builder where a warranty will also be included.
- VA assistance.In case the borrower experiences some temporary financial difficulty, additional assistance is extended to the veteran.
With all these benefits in place, a VA loan remains to be the best option for those eligible for it. It allows you to secure a home without the usual difficulty, and helps you get your dream home at the best value possible.