There are many ways to show gratitude to our veterans. One way is through observing Memorial Day in recognition of their service. Another way is by informing veterans of the unique options available to them. In this case, we're talking about VA loans.
How Do VA Loans Work?
The Veteran’s Administration, or VA, doesn’t actually loan money. Instead, it guarantees a portion of a loan made by a private lender so that an eligible veteran can take advantage of the mortgage benefits that come with VA loans.
What are the advantages of VA loans? Are there any requirements specific to VA loans? Let’s look at a few of them!
1. No Down Payment
Lots of people think you need a 20% down payment to buy a house, but that isn’t always the case.
With a VA home loan, qualified veterans are generally not required to make a down payment. However, there are definitely exceptions. For example, lenders may require a downpayment if the price of the home is greater than its appraised value.
2. No Mortgage Insurance
Speaking of down payments, many lenders require borrowers to buy private mortgage insurance when their down payment is less than 20% of the home’s purchase price.
VA loans do not require mortgage insurance, allowing veterans to use their money for other things, such as saving for their kids’ educations or for their own retirements.
3. Lower Interest Rates
Lenders often are able to offer VA home loan borrowers interest rates that are lower than the rates charged on conventional loans that are available to the general public.
4. No Pre-Payment Penalties
VA loan borrowers may pay their loans off at any point without paying a pre-payment penalty. Pre-paying your mortgage is a great way to save money on interest fees when you can swing paying the lender the extra cash.
5. Who Qualifies for a VA Home Loan?
Veterans, active duty service members, reservists and members of the National Guard, as well as some surviving spouses of deceased veterans may be eligible for a VA loan. The goal is to help veterans and their families live in the homes they deserve.
For more information on VA loans, check out our blog post Could a VA Loan Make Your Homeownership Dream a Reality? – or get started on your loan application today.