Loan Benefits: How the VA Helps You
Can you imagine getting a home loan without a down payment? How about avoiding PMI? Your VA Loan Benefit can make both of those home-buying pitfalls completely avoidable in many cases.
Veterans and active duty servicemembers are eligible to apply for VA Loan Benefits, which can make the home buying process easier and more affordable. In many cases, eligible homebuyers do not need to have a down payment. In contrast, FHA loans require 3.5% down payment and conventional loans are typical around 5%. This is a huge savings for the home buyer!
Another benefit to a VA Loan is the avoidance of mortgage insurance premiums. PMI is required in other loans. Conventional loans require PMI when the down payment is less than 20%. FHA Loans require PMI that have an annual cost in addition to the upfront charges. Avoiding the PMI provides a significant savings to the home buyer – and so does limiting the closing costs, another VA Loan perk. Sellers can be required to pay all of your closing costs – and up to 4% in concessions!
VA Loan Benefits will provide you the comfort of lower average interest rates than other lenders. There is no prepayment penalty on a VA loan, which means VA home buyers can pay off a loan early without any penalties or financial repercussions.
If a Veteran has already used their loan benefits, they may still be eligible for VA financing through “Second Tier Entitlement.” This allows Veterans to restore loan entitlement and buy homes again.
The VA Loan program has two different refinancing options for eligible homeowners – one for those with an existing VA Loan and another for those who have a conventional loan and wish to refinance into the VA Loan Program.
The VA Loan Program also tries to help protect its borrowers should difficult times arise. In the event of financial hardship, a VA Loan might be assumable by another party. There are also advocates to help Veterans and active duty servicemembers avoid foreclosure.
Your VA Loan doesn’t guarantee that your house will be perfect – no house is! The VA will appraise your intended property, but this is not an inspection. It is in your best interest as a potential homebuyer to have a full home inspection performed on any house you buy.