There are many factors that have contributed to people looking into pursuing a VA Loan – tight credit, tougher mortgage lending guidelines and in some cases wage freezes. The lending industry has been seeing more veterans and military families turning to this type of loan since they are more flexible and require no down payments.
The Department of Veterans Affairs in 2015 backed a record number of loans and they expect the volume to go up by 36 percent in the next five years. This benefit was initiated after World War Two to help veterans enter the housing market – however this hard earned benefit has become one of the most powerful mortgage options in the industry.
The following are the biggest benefits of a VA Loan:
1- No Down Payment – Qualified buyer can purchase up to a home for $424,100 in most areas of the country without a down payment. In more costly areas this figure could be higher. Conventional loans usually require 5 percent down and FHA loans want 3.5 percent money down. The average VA Loan last year was $244,000 - if you wanted a conventional loan you would need $12,200 for a down payment and for an FHA loan $8540 would be needed.
2- No Mortgage Insurance – VA Loan buyers do not have the expense of getting mortgage insurance. Both conventional and FHA borrowers that cannot afford to pay the full down payment for a home will have to pay for mortgage insurance. That can add around $100 a month to monthly payments and be required until you have built sufficient equity into your home. VA buyers do have an upfront funding fee that most choose to roll into their loan – this fee is to help keep the loan program running. Veterans that receive compensation for a service related disability are exempt from this fee.
3- Flexible Credit Guidelines – the loan from the VA has financial flexibility matched by common sense credit underwriting. The government recommends lenders to take a more lenient approach when looking at a buyer’s credit and financial profile. The VA does not set a credit score requirement for this type of loan. Plus veterans can get a loan just after a year if they have been in foreclosure or bankruptcy.
4- Interest Rates – Veterans and military members have access to the lowest-rate loans. On average VA loans have the lowest rate loans for the last 30 consecutive months – rates vary with the lender you are working with.
5- Closing Costs – A VA buyer can ask a seller to pay all of their loan-related closing costs and up to 4 percent of the home’s value in concessions. These concessions can be in the form of pre-paid property taxes, homeowners insurance or pay the buyers funding fee. The VA also limits the costs and fees the lender can charge and there are buyers that aren’t allowed to pay.
Bottom Line – If you are a veteran or still in the military you should speak with a professional to find out if this type of loan is right for you.
Keep in mind that whether you are interested in buying a home or listing a home, a Realtor should represent you– this person is working for your benefit and will help you navigate through the buying or selling process. I have thirteen years in New Home Sales and fifteen years in General Real Estate sales!
I Sell Las Vegas! www.iSellLasVegas.com
Thanks and make it a terrific day…………Robin