If you’re making plans to become a homeowner and you qualify for a VA loan, one of the first items on your to-do list should be exploring the possibilities offered by the U.S. Department of Veterans Affairs’ home loan programs. We think you’ll find that VA home loan benefits live up to the hype.
Created as part of the GI Bill, which was established to help veterans of World War II, the VA loan program was designed (1) to support the overall economy by channeling investment capital and (2) to ease the post-war adjustment of those who had served their country by providing veterans with a way to build credit and helping qualifying service members and veterans become homeowners. Since its inception in 1944, more than 20 million VA loans have been approved, according to the Army Times. Why do so many qualifying borrowers opt for a VA home loan?
VA Home Loan Benefits
VA Loans Have More Flexible Financial Requirements
As a benefit earned through service, VA loans are only available to a select group of people. However, meeting the program’s eligibility requirements is simply the first hurdle. You also have to demonstrate to the lender that you have the financial resources to be approved for the loan you are requesting.
Fortunately for aspiring buyers, the financial requirements for a VA loan are far more flexible than those used for other forms of mortgage financing. The VA does not demand that borrowers have a certain credit score or that they have a perfect credit history. Instead, it stands behind each VA loan with a guarantee so that the lenders who actually offer the loans are more willing to accept less-than-stellar incomes and credit histories. While lenders do want to see that you are willing and able to repay the loan, their flexibility in evaluating your financial situation gives you a better chance of securing a mortgage with a competitive interest rate and favorable terms.
VA Loans Keep a Borrower’s Upfront Costs Low
Renters dreaming of becoming homeowners often spend years saving for a down payment and setting aside funds for expenses like closing costs. Borrowers who qualify for a VA loan don’t have to do that, because you don’t need a down payment when using a VA loan (source). You have the option to make a down payment, of course, and doing so can help you keep your monthly mortgage payments low, but no down payment is required. In addition, the VA not only sets limits on how much a borrower using a VA loan can pay in closing costs but also allows those closing costs to be rolled into the loan. Since borrowers don’t need to bring as much money to the table with this form of financing, using a VA loan may let you buy your dream home sooner rather than later.
VA Loans Make Borrowing Money More Affordable
Borrowing money comes with a price tag in the form of interest. A lower interest rate means that you’ll enjoy a lower monthly mortgage payment and that the total cost of your loan will be less. The VA’s backing of these loans means that lenders are willing to provide VA loans with attractive terms, including low interest rates (source). To make the deal even sweeter, VA loans also skip the requirement for mortgage insurance. While most home loans demand that borrowers who make down payments of less than 20 percent pay for mortgage insurance, people who utilize VA loans can forgo this extra expense, which can result in substantial savings.
VA Loans Come with Built-in Consumer Protections
A home is a major financial investment, and buying one isn’t something that most people do frequently. To help protect veterans as they make this substantial purchase, a VA loan includes certain consumer protections. As NerdWallet points out, any property purchased with a VA loan must meet the VA’s Minimum Property Requirements, which are designed to ensure that the property is safe, sound, and livable. VA loans also forbid any prepayment penalties, so borrowers won’t be charged for paying off their loan early. Finally, one of the other VA home loan benefits is that the VA offers assistance after the sale to borrowers who find themselves struggling to make their monthly mortgage payments due to temporary financial difficulties.
Whether you’re interested in learning more about VA home loan benefits or curious about other mortgage programs, you can count on PrimeLending of Springfield, Missouri, for friendly, expert assistance. We firmly believe that buying or refinancing a home should be a rewarding, positive experience. Our team of knowledgeable home loan professionals is ready to guide you through the mortgage process, making it as simple and transparent as possible. If you’re ready to buy a home or refinance your existing one, don’t wait. Contact PrimeLending today.