If you’re a veteran, thank you for defending the country, putting your life in the line of service, and keeping all citizens protected. Everyone surely appreciates all the hard work and sacrifices you made to make this country safe. And, if you’re reading this, you’re probably interested in learning more about VA loans.
VA loans are created to help veterans purchase a home at an affordable cost. They’re one of the best benefits you may receive as a veteran. So, don’t hesitate to talk to your local financial institution, especially if they’ve given you the opportunity to request and file for a loan.
If you want to know whether you’re qualified for a Veteran Affairs, or VA loan, you may visit your local financial institutions or check out sites like securityamericamortgage.com for more information.
What Is A VA Loan?
A VA loan is a mortgage loan program that’s exclusive for American veterans. It was established and managed by the US Department of Veteran Affairs (VA), and was previously called the Veterans Administration. With this, veterans, as well as their surviving spouses, can purchase a new home with a low to zero down payment, competitive interest rate, and no mortgage insurance.
Also, VA loans are available to active members, have no prepayment penalties, and offer generous terms, perfect for veterans who have no other source of income. However, you still need to submit all the requirements and be qualified for a loan. Once your request has been granted, you’ll be able to purchase a new home with less money than you’d expect.
In addition, a VA loan in itself isn’t produced by the government. But, since it’s guaranteed and backed by the government, it’s okay for most lenders and creditors to offer such loans. In addition, it’s less risky compared to the conventional mortgage system.
Moreover, VA loans aren’t only used to purchase a fully-built property, but also for building a home from scratch. This is called a VA construction loan.
What Is VA Construction Loan?
A VA construction loan is a program for veterans, helping them purchase a lot and build their residence with a small down payment. It’s often managed with a one-time loan at closing prior to construction, which is popularly known as a one-time close VA construction loan.
In addition, finding a reliable VA construction loan provider can be difficult. This is because most VA lenders rarely offer loans for new constructions.
If you need some assistance, you may visit Security America Mortgage or other local VA financing institutions that offer VA construction loans. Also, check their interest rates and determine which one fits your budget.
Why Are VA Loans Important?
VA loans are highly important as they help veterans acquire properties without spending a fortune. Also, these loans allow them to manage their budget efficiently, helping them pay for their essentials (and possibly medical expenses) and their dream homes at the same time.
Moreover, there are other reasons why VA loans are important:
No Down Payment
As mentioned earlier, VA loans allow veterans to purchase a home with a low to zero down payment. This, by far, is the most important benefit VA loans can provide.
Usually, it’s difficult for most people, especially retired veterans and service members who have a limited income stream, to pay the usual down payment to attain homeownership. But, with VA loans, they don’t need to spend their years’ worth of savings on lump-sum payments. They’ll be able to acquire homeownership without paying out even a single penny.
No Private Mortgage Insurance
Private mortgage insurance (PMI) is a lender’s way of protecting themselves from a borrower’s default. In most cases, conventional creditors require applicants to pay monthly PMI, unless they can pay the minimum 20% equity of their home’s value, which is extremely difficult for most veterans.
But, with VA loans, veterans don’t need to worry about PMI. This will help them save thousands of dollars every year and improve their buying power.
Competitive Interest Rates
A competitive interest rate is another essential benefit of VA loan programs. Also, rates are fixed, so you don’t have to worry about the effect of inflation on your dues for the next 30 years.
Usually, the interest rates for VA loans are 0.5 to 1.0 percent lower than conventional loan programs. With this feature, veterans will be able to save as much as USD$80,000 (for a USD$450,000 loan amount).
Relaxed Credit Requirements
VA loan lenders use credit rankings to assess a borrower’s payment capability. Also, minimum credit scores may vary depending on the creditor, but don’t worry since credit requirements for VA loan programs are usually lower than conventional mortgages.
With VA loans, you can still borrow thousands of dollars, even if you don’t have a near-perfect credit standing. Also, they even let borrowers who have been bankrupt before. Learn more about credit repair for veterans at Daily Prosper.
Contrary to popular beliefs, VA loan programs aren’t a one-time benefit, meaning you can use them again and again as long as you qualify, and they never expire. Also, it’s not necessary to pay back your previous loans to request a new one. In fact, lenders may offer two loans at the same time through second-tier entitlement.
However, the rules regarding second-tier entitlement can be confusing. It’s better to communicate with your VA loan lender to understand this feature better.
Multiple Loan Options
You’re probably surprised to hear that there are plenty of options VA loans have, and every type has its own purpose, such as:
- VA Purchasing Loan: This is the most common VA loan option for veterans, and it’s used for purchasing fully-built homes as the primary residence.
- VA Interest Rate Reduction Refinance Loan (IRRRL): Also known as the VA streamline refinance, IRRRL is an ideal option for veterans who seek lower interest rates and adjustable loan rates. However, this is only given to veterans with active loan status.
- VA Energy Efficient Mortgage (EEM): This loan is an ideal option for veterans who want to upgrade their homes to save more on their utilities. They can use this loan to improve their home equipment and make everything energy-efficient, helping them save on energy-related costs.
- VA Cashout Refinance: This loan is for veterans who want to cash out their loans to upgrade their homes or address financial emergencies.
Veteran Affairs Loans Final Words
Veteran Affairs, or VA loans, help veterans, service members, and active members to purchase a home at a very affordable cost without down payments and PMI. Also, VA loans offer competitive interest rates, allowing veterans to save more on monthly dues compared to conventional loan programs.
That’s why it’s highly important these days, especially now when every price increases. If you’re interested, call your VA loan provider immediately and see if you’re qualified.