Here are 5 benefits to a VA loan to consider when looking to purchase your dream home.
No Private Mortgage Insurance
You don’t have to pay for Private Mortgage Insurance! The main characteristic of the Veteran home loan program includes the mortgage being insured by the federal government. The mortgage insurance shields lenders against all losses that result from veterans not having the ability to make a mortgage payment or from a foreclosure. Insuring mortgages additionally encourages lenders to keep closing and origination costs low due to the mortgage being less risky. Less risk additionally encourages lenders to become more flexible on credit, as well as additional lending standards, permitting more veterans to be eligible for the mortgage.
The VA prohibits some lender costs! Veterans financing homes via the VA possess the flexibility to negotiate expenses right with lenders. The VA home loan program or the participating lenders don’t set interest rates, the quantity of closing costs or additional charges. Thus, veterans will be free to research the closing costs, rates, and mortgage terms provided by additional lenders. But, the VA limits the closing costs that lenders charge veterans. For instance, the VA will prohibit lenders from charging veterans for lawyer’s charges, brokerage charges or inspection charges upon new construction supervised by the United States Department of Housing & Urban Development. Additionally, the VA house loan program doesn’t require a down payment for many borrowers. Those particular rules are meant to assist in making home ownership reasonable amongst the population of veterans.
The VA is Flexible
The VA is very flexible! The VA permits veterans to buy various properties via an array of financing choices. For instance, veterans possess the choice to purchase a conventional home, condo, manufactured home, to construct a new house or to improve an existing house with features that are energy efficient. Veterans purchasing a house which requires energy-efficient improvements might raise the quantity of the Veterans mortgage loan by a max of $6,000 if a veteran expects to save cash on utilities by putting in energy-efficient improvements like cooling and heating systems, solar energy insulation or systems, weather-proofing, according to the VA.
Refinancing Options Available
The VA permits Interest Rate Reduction Refinancing Loans! These are like traditional streamlined refinancing loans obtainable via additional federal housing programs and traditional lenders. Interest Rate Reduction Refinancing Loans are made to assist veteran home buyers in refinancing existing mortgages to gain a lower interest, as well as generate a lower month-to-month mortgage payment.
BAH (Basic Allowance Housing) Can Count as Income
BAH can count as income! If you’re a qualified active duty member lenders can count your BAH as income. This allows active duty members to qualify for higher loan amounts plus pay the monthly mortgage costs.