The VA home loan program is among the most important loan programs and one of the most popular options for veterans and active service members. Over 20 million veterans have benefited from the program since it was rolled out as a part of the Original GI Bill by the Department of Veterans Affairs. It’s evident that the VA home loan is more than a blessing for all veterans as it has helped them secure mortgages more quickly. For most veterans and people who serve our country, they can rely on VA home loan to become homeowners. Here are the benefits of VA home loan.
- There is no Down Payment
You may have noticed that most loan programs ask for a down payment to purchase a home before settling the balance. For the VA home loan, that’s not a must.
The other home loan programs ask for a five to 20 percent of the total home price upfront. For a VA loan though, you can finance up to the entire price of a home.
- There is No Mortgage Insurance Required
A VA home loan doesn’t ask for mortgage insurance. According to some VA estimates, VA loan beneficiaries save millions annually on mortgage insurance costs.
Conventional and FHA loans require you to pay insurance charges upfront and annually, and you can have to part with up to $170 monthly for the insurance. Since VA loans don’t need a down payment or mortgage insurance, they are more affordable.
- They Offer Low Rates
Department of Veteran Affairs guaranteed that home loans come with low interest rates. The reduced rates are partly decided by the Federal Reserve. Most traditional home loans have adjustable rates that can rise from three to over 12 percent.
The good thing about VA home loan is that they have a fixed rate which will never increase since the interest rate is set for about 30 years. The annual payments will remain the same for all that period you will be servicing the loan.
- They are Guaranteed by the Government
Have you ever wondered why VA loans have such favorable terms? The federal government covers you. They guarantee you that they will repay a portion of the loan to the lender in case something like a tragedy happens and you are unable to make the monthly payments.
The loan repayment loan guarantee encourages the lenders to come up with exceptionally attractive terms that are favorable to the borrower as long as they have VA home loan qualifications.
- There Are No Pre-payment Penalties
Many people know that if they pay the loan early, they can save some money. Whenever they are late, they are always forced to pay pre-payment penalties which protect loan lenders from losing years and years on issued loan’s interest payments.
The VA borrower has an advantage here. They can pay off their VA loan on time and therefore, they aren’t in the risk of being slapped with prepayment penalties.
- Home Inspection is Conducted by the VA
A home inspection is important. It ensures that you buy a house that’s worth your money. Imagine buying a house that requires repairs and you will have to part with more money! Also, you won’t have to pay around $500 for inspection since VA have their own inspector.
The VA inspector will ensure that the property meets the living standards, and that means that buyers are protected from purchasing an unsafe or damaged home.
- Comes in Many Varieties
A VA home loan can be acquired and used to purchase a condo, duplex, house on the beach, build a home, etc. They come in fixed or adjustable rates.
Moreover, a VA home loan can be used to refinance an existing mortgage or make home repairs and improvements. You get to decide why you want the loan.
Conclusion
Active service members and veterans with a dream of owning homes have a reason to smile. The VA home loan makes it easy for every one of them to own one as long as they are eligible.
Veterans and spouses applying for a VA loan must also ensure they meet the financial qualifications for the loan. This means the applicant must have an adequate credit rating and income while maintaining current debt at responsible levels.