Tips & Special Topics
Quick Reference: Benefits of a VA Loan
It is estimated that over twenty-nine million veterans and service personnel qualify for a VA home loan. Many are veterans who have already used their loan benefits. It is now possible to use VA financing to buy another home by using remaining or restored entitlement. There are many benefits that are associated with VA home loans.
Before a veteran arranges for a conventional mortgage to finance a house, he or she should consider the many advantages of VA mortgage loans. They include:
- One of the most popular advantages to VA loans is that there is no down payment required in most cases. The maximum amount of the loan may be up to 100% of the reasonable value of the property. The VA establishes this amount, and the current guaranteed maximum is $417,000. This is a substantial amount of money to put towards your home. A down payment can deter someone who wants to purchase a home but, does not have a lot of cash on hand. An eligible veteran may not have to put any money down on the house of his or her dreams.
- When a veteran uses VA financing to purchase a home, there is a limit on the amount the borrower has to pay in closing costs. In some contracts, the seller may agree to pay the buyer’s closing costs, which can save a veteran thousands of dollars.
- With a VA loan, there are not any monthly mortgage insurance premiums to pay.
- Many veterans take advantage of the current low interest rates to purchase their homes using a VA loan.
With a VA loan, you do not need to pay your property taxes or homeowner’s insurance out of pocket all at once; they will be “escrowed” and spread out over the year as part of your monthly payment
- Unlike some “option” or “interest only” conventional loans, on a fixed-rate VA loan, a portion of each regular monthly payment is applied towards the principal balance
- An existing conventional mortgage can be refinanced with a VA loan
- With a VA loan, a veteran has the right to pay the loan off early without being penalized.
These are only a few of the numerous advantages to VA home loans.
