If you are in the market for a new home and you're exploring your financing options, don't dismiss the benefits of pursuing a VA loan if you have the military qualifications to be eligible. Especially in struggling real estate markets, a VA loan may be a great option for your home purchase. Here's a look at four of the biggest benefits of choosing a VA loan to finance your new home.
More Flexible Qualification Requirements
Unlike traditional loans, VA loans are issued in the interest of helping service members to find a home. As a result, the credit requirements, income expectations and payment histories required to qualify for a VA loan are often much more forgiving than those of their traditional financing counterparts. In fact, in some cases, people who couldn't qualify for a traditional loan due to low credit scores may still be able to buy using a VA loan instead.
The Potential for No Down Payment
The lack of down payment requirement is one of the most significant benefits of VA loans. If you qualify, your lender will tell you how much you can spend without requiring any down payment. The total purchase amount will vary based on the region of the country where you're shopping, because the housing market supports different pricing by region. You'll typically be allotted a larger mortgage without a down payment in areas where the home prices are substantially higher.
No Mortgage Insurance Requirement
Most traditional mortgage loans require that you purchase mortgage insurance if you're unable to pay at least twenty percent down on the house. That insurance premium can add up over time, sometimes tacking on as much as a couple hundred dollars each month. With a VA loan, you won't be required to carry this type of insurance, so you may be able to save significantly over the life of the loan. Instead of paying for mortgage insurance, most VA loan borrowers pay a service fee at the time of the loan's closing, though borrowers who have a disability as a result of their service time may be exempt.
Limited Closing Costs
Although closing costs are a fact of any home purchase, they can vary based on the type of loan you opt for. With a VA loan, there are limits in place to control how much you can be expected to pay in closing costs, putting most of the responsibility for those expenses back on the seller. This may save you several hundred dollars at closing.
Share25 November 2015
When it comes to borrowing cash for a new house or a nice car, how much money do you really need? Although you might be tempted to mortgage yourself to the brim or borrow a little more than you should, the fact of the matter is that everyone has financial limits. My blog discusses the impact of borrowing more than you need, so that you can make smarter decisions with your money. In addition to keeping you out of trouble, this valuable information might also improve your quality of life and protect your financial future. You never know, it could make all the difference.
