It seems that few people know the advantages of these government loans over conventional. Conventional certainly has its place but sometimes not the best option.
Veterans Administration (VA) is financing available to military members, past and present, that have served 90 days of Active Duty service during wartime, and 120 days during peace time (we are in wartime currently). The funding fee for a VA loan is 2.15% of the loan amount for first time users, and 3.3% for subsequent uses, which can be financedin the loan amount. If the veteran is labeled as disabled from the VA, their funding fee is 0% ! The VA also offers an Interest Reduction Loan for VA users to refinance to a lower interest rate. The funding fee on that loan is 1/2% of the new loan amount or 0% if disabled. VA loans will allow the seller to pay ALL customary closing cost AND up to 4% of the sales price for other things like discount points to lower the interest rate, or to pay off installment debt (cars, furniture) to help buyers qualify for the loan, or even bad debt (judgements, collections). VA has no minimum credit score requirement and the approvals are often more lenient than conventional. VA has no mortgage insurance premium.
Federal Housing Administration (FHA) is another great tool with no credit score requirement and 6% closing cost assistance allowed from the seller. Coupled with a down payment assistance program and it is also $0 down! The funding fee for FHA loans is 1.5%, which can also be financed. The mortgage insurance rate on FHA is .5% a year, which is less than almost all other conventional programs with as little money down.
These programs are both awesome programs that people are sometimes scared of for some reason. Maybe its only because they do not know as much about them!?
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