Veterans that serve our country deserve a lot of recognition. One such way they are rewarded is with the ability to obtain a VA loan. This loan provides our veterans with a mortgage with low rates, easy to qualify for rules, and the ability to assume the loan. The benefits provided to veterans with this loan are those not found with any other loan type. If you are a veteran it is in your best interest to find out more about your veteran mortgage benefits.
No Down Payment
The fact that you do not need a down payment is one of the most important benefits to many veterans. Whether you just finished your service or you are many years out, not having the cash to put down on a home is a common problem. With a VA loan, however, you do not need the cash as the loan provides 100 percent financing. While this does mean you will not have any equity in your home, if you plan on staying in the home for the long-term, you will gain that equity back as you make your payments. For the time being, however, it gets you into home ownership and allows you to have money in your pocket to get your home looking the way you want it.
No Mortgage Insurance
Mortgage insurance is a problem many loan programs have because it is often expensive. Conventional loans have the highest private mortgage insurance rates with FHA loans following right behind. VA loans, on the other hand, do not have mortgage insurance requirements. The closest thing you come to mortgage insurance is the funding fee that you pay up front when you close on the loan. If you are unable to pay the fee, however, most lenders allow you to roll that cost into the loan, bringing your loan-to-value even higher than 100 percent.
If your interest rate is higher than rates right now or in the future, you can easily refinance a VA loan. The Interest Rate Reduction Refinancing Loan, or IRRRL, makes it very simple to refinance. According to the VA, you do not need a new appraisal or credit package to refinance your VA loan into another VA loan. The largest stipulation is that you need to prove that the new loan will save you a significant amount of money, increasing your monthly disposable income. The VA is very concerned with the amount of disposable income veterans have available, so if a lower rate become available, they will provide it for you with this simple refinance that basically requires you to pay closing costs and start a new loan.
Easy Eligibility Requirements
Many loans, namely conventional programs, are hard to qualify for because of the new requirements. Debt ratios must be lower than in the past; credit scores must be higher; and income must be consistent. Although consistent income is a requirement on every loan program, the VA loan is easier to qualify for because of the backing the VA provides. There is a guarantee of a portion of every loan, allowing lenders to take slightly more risks on the loans they provide. This translates into a little leeway on debt ratios, credit scores, and the length of time income is received. As long as you can prove consistency and enough disposable income on a monthly basis, VA loans are easy for our veterans to obtain.
Another thing that sets the VA loan apart from FHA and conventional loans is its ability to be assumed. This means that someone that wants to purchase the home can do so by taking over your loan right where it is at. The new borrower must qualify for the loan, meaning he has to provide his credentials including his credit report, income, and debts, but he does not need to start a whole new loan again. He takes over your loan with the same terms, interest, and equity. The only difference is he must pay the funding fee to cover the paperwork involved in the assumption of the loan. If the person assuming the loan is a veteran and he uses his entitlement, you are then free to use your entitlement on another VA loan. This is a big perk for veterans that are in an area where homes are hard to sell as it gives you the leg up on the competition.
The VA has many benefits that other loans do not offer. If you are a veteran, it pays to ask about the benefits of this loan from several lenders. Remember that each lender can create their own requirements on top of what the VA requires, so what one lender allows, another may not. If you shop around for a loan within a few weeks of one another, your credit score is only hit for one inquiry, not several, so you will not damage your score. Take advantage of the benefits of the VA loan and see what you qualify for today!