4 benefits of VA loans you should know

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VA loans offer important benefits to help seniors and their families achieve the dream of home ownership.

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Limited inventory and high interest rates dampened the housing market significantly in 2022, with home sales falling nearly 18% from 2021. according to data from the National Association of Realtors. At the same time, home prices continued to climb in 2022, with the current-home sales price rising 2.3%. However, experts predict that demand should be low and interest rates should rise lower prices in 2023.

Fortunately, those who have served our country and their spouses can use Veteran Affairs (VA) loans to make it easier. or financing a home. VA loan these mortgages are approved by the US Department of Veterans Affairs, and are available to veterans, active duty and reserve personnel, and surviving spouses. Because these loans are insured by the federal government, lenders can offer many benefits to make buying a new home easier and more affordable.

if it seems like something you can benefit from then consider doing it right away. It only takes a few minutes check eligibility for VA loans.

4 benefits of VA loans you should know

1. Little or no payment is required

One of the most common hurdles in home ownership is coming up with a down payment, especially for first-time home buyers. A 2022 report from the National Association of Realtors said that 27% of younger millennial buyers listed saving for a down payment as the most difficult step when buying a home.

However, the down payment is not a problem with VA home loans since these mortgages do not require a down payment in most cases. Other loans require at least a down payment, such as a 3.5% down payment on an FHA loan or at least 3% down on a conventional loan.

This means that if you want to buy a $400,000 home, you need to put down $14,000 with an FHA loan and $12,000 with a conventional loan. In contrast, your down payment on a VA mortgage will be $0, meaning you won’t have to save for years to get the money for your own home.

You can easily determine your eligibility here right now.

2. No private mortgage insurance (PMI)

Private mortgage insurance (PMI) This is a type of insurance that most traditional mortgage lenders require you to pay if you have less than 20% of the purchase price of your home. Similarly, new FHA loans require you to pay a mortgage insurance premium (MIP). In both cases, the purpose of mortgage insurance is to reduce the borrower’s risk of financing a mortgage.

Fortunately, VA loans do not require mortgage insurance since the Department of Veterans Affairs backs its loans.

3. Low interest

Another important benefit of VA loans is that interest rates are usually 0.5% to 1% lower than conventional loans. That difference is possible help the elderly to rescue tens of thousands of dollars or more in a 30-year mortgage.

According to Freddie Mac, the average mortgage interest on a 30-year fixed-rate mortgage is 6.15% from January 19, 2023. At that rate, on a $400,000 home, you’ll pay more than $477,000 in interest over 30 years. A similar VA loan with an interest rate of 1% would generate $386,000 in interest, representing a savings of $91,000.

4. Reduce debt and debt to income

Finally, VA loans typically have more credit and debt-to-income (DTI) adjustments than conventional loans. The VA does not specify a minimum credit score for the loans they approve. Instead, banks and lenders set their own minimum limits, so conditions can vary. Usually, you can qualify for a VA loan with FICO credit score below 620, but most traditional mortgages have a score of 670.

In addition, VA loans often have better debt-to-income (DTI) guidelines, which measure the amount of your monthly debt payments compared to the amount of monthly income. With VA loans, your monthly debt, such as your car or student loan payments, must be more than 41% of your income. monthly income. However, you can still qualify for a VA loan with a DTI rate of up to 55%. In that case, your lender will require you to meet additional credit score and income requirements.

It can be fast check your eligibility for VA loans with Veterans United now.

Other ideas

While you don’t pay mortgage insurance on a VA loan, you likely have to pay a VA fee. The purpose of this bill is to help the government reduce taxpayers’ money to fund the VA loan program.

The financing fee varies, from 1.4% to 3.6% of the loan amount, depending on the amount of your down payment, and how often you use it. a VA loan and more. You can pay the full fee up front at closing or roll over your loan and pay it back over time. Some disabled adults and surviving spouses are exempt from paying the VA loan fee.

The bottom line

VA loans offer many benefits to seniors, active duty personnel and surviving spouses. Benefits include 0% down payment, no PMI, low interest rates and more flexible financing options.

But the advantages do not end there. VA loans mortgage program also limited fees and price you must pay at closing. In addition, you can use the program many times, because the benefits do not end. Finally, the VA loan can also be determined so that you can give it to another qualified senior. These are some of the benefits that VA loans provide to help those who have served our country to achieve the dream of home ownership.

If you think you might benefit from a VA loan and you want to check your eligibility and prices then start by answering a few short questions here now.

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