VA Loans also known as Veteran Affairs Loans are only granted and guaranteed by the U.S. Department of Veterans Affairs (VA). This particular loan was created to offer long-term financing to a set of eligible Veterans from the United States. The key role was to provide long-term finance to the current American military and their spouses so long as they would not remarry. Also eligible for the loan are the Active Duty Personnel and the Reservists or the National Guard members
The good thing with this mortgage is that one can buy the home from the already occupying owner, and all it requires is a lender approval. This support usually results to little or even no changes it the terms that were previously set. The good thing about getting an assumable mortgage is that you may find that the interest rate that the seller got the loan at is more than what you are currently going to pay. Also, with an assumable mortgage, there are fewer closing costs incurred.
Negotiable Interest Rates
These loans are 100% negotiable. Depending on your payment abilities, you may ask to pay more money monthly for the same time duration but at a lower interest rate. For instance, the loan officer offers you a 4.5% interest to be paid in 25 years with a $3,000 closing cost. You may decide to ask for other options such as what would be the rate if there was to be no closing cost? Or even what would be the rate if you were to pay twice or even more of the closing cost?
Has No Monthly Insurance Premiums
With this type of loan, no PMI is required and therefore, you can save a total of 0.3%- 1.15% of the entire loan amount annually.
No Minimum Credit Required
The service members lack adequate time to conduct savings and try creating a substantial credit. Therefore with these types of loans as far as you have the qualifications, you are good to go.
No Down Payment
As far as you are well qualified, you can finance a 100% of the home value without having to pay even a dime. This is advantageous as it can be difficult for service members to save easily and also try and build a strong credit as they are mainly caught up in the nation serving work.
Competitive Interest Rates
VA loans are usually 0.5-1% lower than other standard interest rates. This is because the VA backs each and every loan with a guarantee thus by using this loans you will be able to save quite a huge sum of money.
No Private Mortgage Insurance
Many existing lenders prefer the borrowers to commit themselves to paying a private monthly mortgage insurance. But if they can pay 20% or, even more, the private mortgage can be withdrawn. This is, however, a strict condition for veterans and thus with VA loans, there is no PMI required as all the loans are backed up by the government and, therefore, is responsible for all the risks. This will, therefore, save the cost that would have been undergone while using PMI.
No Early Payment Penalties
In most of existing loans, paying them earlier before maturing will lead to a pre- payment penalty as the lenders will not get any extra opportunities to get their interest payments. This penalty, therefore, acts as one of other ways get the additional interest. Therefore with VA loans, you can pay off your loans without worrying about any penalties.
Offers Quite A Big Loan
This type of loan offers quite a huge amount of money to suite you home purchase needs. You can get as low as $150,000-$450,000 for normal cases, and this is enough to get you going. There are other extreme special cases where one may even be issued up to $1,000,000. The good thing is that you are getting an enormous amount of money to suit your needs and having to pay it at a lower cost than other types of loans.
Basic Allowance For Housing
The Basic Allowance for Housing comes as a benefit mainly to qualified and also active military members. This is because the lenders can count your BAH housing allowance and put it as effective income meaning you can pay your monthly mortgage cost by use of BAH.