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Are you a veteran or do you know someone that served that could potentially take advantage of a VA loan and its benefits? Monday, November 11th is Veterans Day, and not only would we like to thank our country’s veterans for their service, but we also want to remind them of the benefit they have to obtain a VA loan.
If you’re not familiar with what a VA loan is, it’s a loan that’s governed by the U.S. Department of Veteran Affairs, and it’s there to help veterans, active-duty military personnel, and surviving spouses. The loan helps them to purchase a home at a more affordable cost, requires no down payment, no mortgage insurance, and has more flexible guidelines when it comes to qualifying.
Want to know more about the advantages of obtaining this loan? Here are our top ten benefits of a VA loan…
- No Down Payment Required
VA home loan does not require a down payment, whereas the majority of home loan programs do. The VA loan is a legitimate no-money-down opportunity that allows you to finance up to 100% of the purchase price.
- No Mortgage Insurance Required
You are not required to pay mortgage insurance when you obtain a VA home loan. This is a great advantage as lenders require you pay mortgage insurance if your down payment is less than 20%. The fact that you don’t have to put any money down, or pay mortgage insurance, means you’re saving money upfront, as well as over time.
- Never a Prepayment Penalty
A VA loan has no timeline or restrictions on when you choose to sell your home. You will never be hit with a prepayment penalty or early-exit fee regardless of when you decide to sell. There are also no restrictions when it comes to refinancing your VA loan. You have the ability to refinance your existing VA loan into another VA loan through the Interest Rate Reduction Refinance Loan (IRRRL) program, and you can also switch into a non-VA loan at any given time.
- VA Guidelines Are More Flexible
Yes, like all mortgages, a VA loan still requires you to submit certain documentation to show sufficient income for you to make your monthly payments. But, unlike other loan types, VA loan guidelines are much more flexible because The Department of Veterans Affairs want to make the home-buying or refinancing process much easier for you.
- Closing Costs Are Less Expensive
Another reason VA loans are more affordable is because the VA limits the amount of closing costs a lender can charge to a VA loan applicant. With no down payment, no mortgage insurance, and lower closing costs, you can now save money or put it towards other things like home repairs, moving costs, furniture, etc.
- There is Funding Fee Flexibility
A “funding fee” is a requirement for VA loans. It is an upfront cost that’s based upon factors such as your loan amount, type of eligible service, down payment size, and more. However, you don’t necessarily have to pay funding fees in cash. The VA allows you to finance it within your loan, so that nothing is actually due at closing.
It’s also important to note that not all VA borrowers have to pay it. The funding fees are typically waived for any veteran who receives VA disability compensation, and also for unmarried surviving spouses of veterans who died during service or as a result of a service-connected disability.
- VA Loans are Assumable
An “assumable” VA loan means you can transfer your VA loan to a future home buyer as long as that person is also VA eligible. Most VA loans are, in fact, assumable, and can be a great benefit to you when you sell your home. If your current home loan has a low rate, and then market rates rise in the future, your assumable loan becomes really valuable.
If you’re interested or possibly know someone else that could be interested in obtaining a VA loan, feel free to call our office to learn more about this opportunity! Another benefit NJ Lenders provides to our hard working military families is that we waive all lender fees. Thank you again to our veterans, as well as all of the current men and women serving our country!
Happy Veterans Day!