YES!...actually...
For eligible veteran and active duty military borrowers in Alameda, CA a VA loan is often a better option than a conventional mortgage. This is due to the many distinct advantages offered by VA loans.
For starters, VA loans have fantastic interest rates. VA loan rates can be up to .50% lower than what you would get in a conventional mortgage!
That's about $32.00 per hundred thousand which may not sound like much but on a $500,000 home you can put zero down and save $2000 a year. Just for being a veteran!
Another big advantage of VA mortgages is that they do not require any monthly mortgage insurance.
Private mortgage insurance (PMI) is generally required on conventional loans when borrowing more than 80% of the value of a property, and the percentage amount varies with the loan-to-value.
Once again, this may not seem like a lot of money, but when added up, PMI also ends up costing hundreds of dollars a year, if not more. We have seen FHA increase its PMI several times since 2008. This is a non-issue for veterans!
It is also typically easier to qualify for a VA mortgage loan than a conventional mortgage. This has become especially true with the current downturn in the housing market.
VA loans do not require any money down at time of purchase making it the only loan option with 100% financing available! In this market it is impossible to find 100% financing for a conventional loan.
In addition, veterans are allowed to choose between having a fixed rate or an adjustable rate for their VA mortgage. The difference between the two options is as follows:
- Fixed rate loans have only one interest rate that is used throughout the duration of the loan.
- Adjustable rate loans start off with a set interest rate, but after an established time period the person who took out the loan can have their rate changed if it would work in their favor.
The Department of Veterans Affairs does have a funding fee requirement for VA loans. This funding fee can be anywhere between 0.5% to 3.3% of the loan total. However, veterans who were classified as disabled during at least 10% of their time in active duty do not have to pay the fee.
Refinancing with a VA loan also has many benefits over refinancing with a conventional loan. Some of these benefits include:
- A higher refinance limit (up to 90% and some 100%) than the majority of conventional loans.
- Easier credit requirements, which often make refinancing with a VA loan simpler and less stressful.
- Help from the Department of Veterans Affairs for borrowers currently in default because of financial hardship.
- No requirement of private mortgage insurance.
- The ability to include the VA funding fee with the total amount of the refinance.
Between the tremendous savings and easier terms, any veteran who is wither purchasing or refinancing a home should strongly consider using their hard earned VA benefits. In both the long and short, it simply makes sense.
If you or someone you know is looking to explore their options with VA financing feel free to contact us, we are here to help you and we love serving those who serve.
Other VA Posts You May be Interested in:
VA Mortgage Loans in Alameda, CA- a Piece of Island History
VA Interest Rate Reduction Loan
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