Shopping for a mortgage can leave you feeling like you're lost in a pile of alphabet soup. There are FHA loans, ARM mortgages, FR mortgages — the list goes on. There is no single mortgage option that is right for everyone, but if you are a military member or veteran who is eligible for a VA loan, that is almost always going to be your best bet. Here are a few reasons why.
1. You don't have to save for a down payment.
You've probably heard friends or family members complain that they have to save such a huge down payment before the bank will give them a mortgage. On a conventional mortgage, the bank usually wants 20% down. FHA mortgages do not require quite so much, but they do still need a sizable down payment. With a VA loan, you do not need to have any down payment. This enables you to get into a home much faster. It's hard to save for a down payment when you're already paying rent, after all!
2. You don't have to pay for private mortgage insurance.
If you were to take out any other form of mortgage that did not require a full 20% down payment, you would have to pay for what's called mortgage insurance. Basically, you would be paying an insurer who promises to pay the bank if you stop paying on the loan. This is not the case with a VA loan. Regardless of the amount you put down, you do not need to pay for private mortgage insurance, which leaves more money in your pocket each month. The government acts as your insurer — and for free. They pay the bank if you default, which makes the bank more comfortable lending to you.
3. Employment requirements are more lax.
Most banks want you to have two years' worth of full-time employment before they will give you a mortgage. Some even want you to have been in the same job for more than a year! If you're in the military, your employment history may look a bit different than average, and that's perfectly okay with a VA loan. Banks who offer these loans will be familiar with the intricacies of military service and won't reject your application because of your service or how it has impacted your employment.
One of the benefits you receive as a service member is the ability to take out a VA home loan. This is definitely a benefit worth taking advantage of if you qualify.Share
4 December 2019
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.