At the heart of every mortgage loan is the desire to secure a place to call home. For veterans and active duty service members, the Department of Veterans Affairs (VA) offers a unique opportunity to do just that with the VA home loan program. This program provides a range of benefits that can help make homeownership a reality for those who have served their country. In this article, we’ll explore the advantages of a VA mortgage and why it’s a great option for veterans and active duty service members.
Low or No Down Payment
One of the biggest advantages of a VA mortgage is the low or no down payment required. While many traditional mortgage lenders require a down payment of 20% or more, a VA loan allows qualified borrowers to purchase a home with as little as 0% down. This can be a huge help for those who may not have the savings to make a substantial down payment. And even if a borrower can afford to make a down payment, it can be put towards other expenses, such as closing costs.
No Private Mortgage Insurance
Another benefit of a VA mortgage is that it doesn’t require private mortgage insurance (PMI). PMI is a type of insurance that’s typically required for borrowers who make a down payment of less than 20%. It protects the lender in case the borrower defaults on the loan. However, with a VA loan, the government backs a portion of the loan, which eliminates the need for PMI. This can save borrowers hundreds of dollars each year.
Competitive Interest Rates
VA loans also offer competitive interest rates. While interest rates can vary depending on the lender, VA loans typically have lower interest rates than conventional mortgages. This can save borrowers thousands of dollars over the life of the loan. And because VA loans are backed by the government, lenders may be more willing to offer favorable terms to borrowers.
Flexible Credit Requirements
VA loans also have flexible credit requirements. While lenders will still review a borrower’s credit history, VA loans have more lenient credit requirements than conventional mortgages. This can be a huge help for veterans and active duty service members who may have struggled with credit in the past. Additionally, the VA doesn’t set a minimum credit score requirement, which means that borrowers with lower credit scores may still be able to qualify for a VA loan.
Assistance with Closing Costs
Another advantage of a VA mortgage is that it can provide assistance with closing costs. The VA limits the amount that lenders can charge for closing costs, and borrowers may be able to negotiate with the seller to cover some or all of these costs. Additionally, the VA can provide a funding fee exemption for borrowers who have a service-connected disability.
Flexible Repayment Options
VA loans also offer flexible repayment options. Borrowers can choose from a variety of repayment terms, including 15, 20, and 30-year fixed-rate mortgages, as well as adjustable-rate mortgages (ARMs). And because VA loans don’t have prepayment penalties, borrowers can pay off their loans early without incurring any additional fees.
Finally, VA loans offer streamlined refinancing options. If interest rates drop or a borrower’s financial situation improves, they may be able to refinance their VA loan to take advantage of better terms. And because the VA doesn’t require an appraisal or credit check for certain types of refinancing, the process can be much quicker and easier than with a traditional mortgage.