VA loans are available to a large majority of veterans of the military or their surviving spouses; if you fit into this category, did you use your benefit? There are many advantages to obtaining a VA loan, many of which cannot be found with any other loan. As with any mortgage, you will have to meet certain requirements, including proper verification of your employment and income, but as long as the potential lender is able to obtain your Certificate of Eligibility, or COE, you are welcome to apply for the VA loan.
It is one of the Least Expensive Loans
One factor that many people do not consider when obtaining a new mortgage is the extra costs that go into it. Before you even get the keys to your new home you are charged closing costs, which vary by loan, but can reach into the thousands of dollars. These closing costs are added onto the down payment that you are required to put down on the home, making the amount of money that you need at closing rather high. Once you have your mortgage, you might still have to pay mortgage insurance premiums on a monthly basis if you did not put down at least 20 percent on the home. You could also be faced with a prepayment penalty if you were to pay the loan off before the specified period of time. As you add all of these fees up, the mortgage can suddenly seem much more expensive than it did in the beginning. With the VA loan, there is no down payment required, there are no mortgage insurance premiums and there is no prepayment penalty. With all things the same, including the rate and term, the VA loan comes out ahead of any loan in terms of affordability.
VA Loans can be Obtained from Many Different Lenders
When you decide that you want to take advantage of your eligibility for a VA loan, you are not restricted to one single lender. The loan itself is backed by the government, but they are not funding it. They are simply there to pay a fraction of the loan back to the lender should you default on it in the future. This means that many different lenders offer VA loans with varying rates and terms. You have the ability to shop around with various lenders in order to find the most favorable terms that fit your needs. Take the time to shop around at various banks, mortgage lenders and credit unions to find the best rate and lowest closing costs that you are eligible to receive.
It is Easier to Qualify than Other Loans
As the housing crisis slowly comes to an end, lenders are still pretty stringent about who they lend to, carefully verifying every fact before approving a loan. This process, while it makes sense, can really slow the loan process down and can even put a delay on buying a new home if there is a hiccup in the process. The VA loan requires much less documentation than any other type of loan, mostly because of the VA guarantee. Lenders are able to be a little less stringent about the requirements to obtain the loan simply because they know if it is defaulted on, they will still be paid. Of course, this does not mean that just anyone can obtain a VA loan. Your credit history as well as your income and employment verification must check out in order to allow the loan to be approved.
One of the Only Assumable Loans
The VA loan is one of the only assumable loans, which can be a major advantage for many people. What this means is that you are able to sell your home to someone and allow them to “take over” your mortgage. This person that takes over your mortgage must also be eligible for the VA benefit, but it allows you to have a leg up on the competition in the housing market as you are able to provide your borrowers with financing with more favorable terms than might be available today.
VA loans have many benefits that should not be overlooked. If you are a veteran with eligibility it is worth checking out how you can benefit from a VA loan. A quick consultation with a mortgage lender or bank will allow you to find out if you are eligible as well as what the terms would be for your specific situation. As you shop for a mortgage, it is important to consider all of your alternatives, including the VA loan.Click to See the Latest Mortgage Rates»