Military veterans deserve thanks for their brave acts of courage. If you’re a military veteran in search of a home, Wyndham Capital Mortgage can offer you a VA loan, which comes with unique benefits to qualify for a mortgage and receive the keys to your home. Keep reading to learn more about five VA loan benefits.
VA Loan Benefits #1: No Need for a Down Payment
One of the things hopeful homeowners may have a hard time with is saving up a down payment. While zero-down-payment mortgages were once available to borrowers, the changing tides of the housing market swept that option away, but not for veterans. Often times, when getting a VA loan veterans don’t have to make a down payment beforehand. This means you may have more money to do with it what you want, like putting in savings or other financial needs. Another great thing about not having to save up a down payment is that you have more funds to devote to any repairs or renovations your new home might need.
“Just because a VA loan typically doesn’t require a down payment doesn’t mean you shouldn’t consider putting money down. The VA Funding Fee charged on most VA loans can be significantly reduced if you can put as little as 5 percent down. For example: If you have ever had a VA loan before and you are looking to buy a new $300,000 home, you could reduce your funding fee by more than $6,000 just by putting 5 percent down instead of 0 percent down.”
VA Loan Benefits #2: Not Having to Pay Private Mortgage Insurance
Usually, borrowers who are unable to put down at least 20 percent of the purchase price of a home may have private mortgage insurance added to their loan. With a VA loan, however, this risk to lenders is eliminated. Because veterans typically don’t have to worry about this cost being added to the monthly payment, it may be easier for them to build up equity in their property and save more in the long run.
“Not having to pay mortgage insurance could increase your buying power by roughly 15 percent, meaning that for the same monthly payment you would spend on a $300,000 house with a Conventional or FHA loan, it’s possible you could look at a $345,000 house with a VA loan.”
VA Loan Benefits #3: Including Basic Allowance for Housing as a Source of Income
Active military members who receive Basic Allowance for Housing can count the funds as a source of income. The benefit of this is that allowance can go toward making your mortgage payments. One thing to keep in mind with Basic Allowance for Housing is that it is not the same for all active military members. Factors such as your dependents, pay grade and physical location all determine how much of an allowance you receive.
“In addition to this, VA loans are typically easier to qualify for than a conventional loan for current or former military members. In some cases they have lower credit score requirements. They also tend to typically have more forgiving debt-to-income ratio requirements.”
VA Loan Benefits #4: No Prepayment Penalties
A prepayment penalty is a fee paid to the lending institution for paying a loan prior to the scheduled maturity date. Yet another great thing about a VA loan is that they don’t come with a prepay penalty. Now you could pay off your loan early and make extra payments without possibly being hit with a prepayment penalty.
“Conventional loans rarely have any prepayment penalties, but VA goes a step beyond to make the refinancing process even easier with their IRRRL (Interest Rate Reduction Refinance Loan) program. This is truly a “streamline refinance” where you can take advantage of lower interest rates without the need for an appraisal or income verification documents. It also significantly reduces the VA funding fee cost, making it more affordable for veterans.”
VA Loan Benefits #5: Lower Interest Rates
In addition to saving money on not having to make a down payment or pay private mortgage insurance, a VA loan also has favorable interest rates. Usually, there are several factors that go into a borrower’s interest rate for a mortgage. Because a VA loan has the backing of the federal government, lenders may not charge as much interest on the VA loan as they would on a conventional loan. It’s not unusual for some veterans to have an interest rate that ranges anywhere from .5 to one percent lower than standard interest rates at the time depending on factors such as (but not limited to) their VA program eligibility, loan amount, FICO score, and property rate.
“Not only are the interest rates typically lower for VA loans, but you will also often find access to larger “lender credits” with VA loans compared to conventional loans. This allows veterans to avoid some (if not all) of the normal closing costs associated with a loan. This can work for both purchases (to minimize your cash needed to close) and refinances (to make it easier to justify refinancing into lower rates).”
How to Take Advantage of VA Loan Benefits
If you are an active or retired military member looking to purchase a home, it may be time to take advantage of the VA loan benefits available to you. There are three main factors that determine your eligibility for specific VA home loan benefits: your length of service, your duty status and the character of service. Whether you want to take advantage of VA loan benefits to buy a home or refinance your current VA loan with lower interest rates, you can get started today. If you would like more information on eligibility visit the website https://www.benefits.va.gov/homeloans/.