VA Home Loan Program
The US Department of Veterans Affairs (VA) has already guaranteed homes for millions of military families. In fact, in the fiscal year 2016 alone, the VA has insured over 700,000 VA home loans, marking such a tremendous high for the program. This program is the most influential home loan solution for veterans and service members in the real estate market today. This particularly friendly, government-guaranteed loan comes with great advantages that lead to homeownership for people who otherwise could not have built home equity by themselves.
Advantages of VA Loan
No Down Payment Required
Loans under the VA home loan program require no down payment nor mortgage insurance. VA loans present competitive rates and terms that are comparable, if not better than, conventional loans. The growing popularity of this loan program is because of their very benefits—ones that are not present in other types of home loans.
Saving for a down payment and building credit can be challenging for military members who are constantly traveling and on the move. Through a VA loan, eligible veterans can finance not just a portion of a home’s value but 100% of it, without having to put down a single dime. As established, there is no down payment required for this home loan.
No Mortgage Insurance
Another thing that’s not present and needed in VA home loan is a mortgage insurance (MI). Conventional loans will require PMI or Private Mortgage Insurance on any loan with a loan-to-value of above 80%. The only way to eliminate PMI is to come up with at least 20% down payment. This can be difficult for most people including many veterans. With the VA loan, there is no mortgage insurance. This is due to the fact the government takes care of all VA loans and assumes the liability involved on behalf of the lender. Because of this feature, you’re more able to build equity with your purchase, efficiently keeping you from shelling out thousands of dollars throughout the life of your loan.
Additionally, interest rates on many home loans are typically dependent on the risk is taken care of by the bank to fund the loan. Because the VA takes care of each VA loan with a guarantee, banks and financial firms face less monetary danger and can deliver interest deals that are usually 0.5% to 1% smaller than the ones in conventional loans.
No Pre-Payment Penalty
With the array of loans available in the market now, paying off a loan right before the loan matures often incurs a borrower a pre-payment penalty. This is due to lenders not getting their expected amount and estimate of interest from the loanee. The pre-payment penalty is a method for lenders to get back much of their lent money. With that established, A VA loan does not have this penalty. Veterans are free to pay off their loan when they are able to.
For more information and personalized calculations about what a Veterans Affair home loan offers, click the link to be led to the leading VA lenders.