Benefits of VA Loan
What are VA Loan Advantages?
Veterans, service members and military families can achieve the dream of homeownership by using the significant advantages that VA loans offer. These are government-backed mortgage loans in which the U.S. Department of Veteran Affairs (VA) role is to insure mortgages issued by approved lenders. This minimizes the losses of lenders will not lose money if borrowers’ default on their mortgage. Additionally, this type of loan requires borrowers to pay for mortgage insurance. This helps mortgage lenders provide some financial benefits that are typically not found in other loan types.
It is important to understand that the VA sets the guidelines, eligibility, terms and guarantees for the mortgage loans. However, the VA does not provide funding for these loans. Qualified lenders fund the loans that may be used to purchase, build, or improve a home.
VA loans offer competitive interest rates, there is no limit to the amount of home loan that you are eligible to get and closing costs may be less than other conventional mortgage loans.
Other VA loan benefits:
- 100% financing
- Credit flexibility
- No monthly mortgage insurance
- ARM and fixed rate assumable loan
- Higher allowable DTI
What property types are eligible for a VA loan?
The single-family home is the most common type of purchase for VA loan buyers, but other kinds of homes also qualify for the loan.
- Multi-unit homes – Require you to live in one of the units as your primary residence.
- Condominiums – Requires the entire complex to have VA approval before you can get a loan for one specific unit.
- Modular homes – Built in a factory and reassembled onsite, must be attached to a permanent foundation and must have been built according to HUD guidelines.
- New Construction – Builders, plans and building sites must be VA-approved and three different inspections are required.
- Manufactured homes – Must meet specific conditions to earn VA approval for this type of property that is better known as mobile homes.
In conclusion, if you are thinking about your long-term mortgage obligations there is another advantage to getting this type of financing. VA loans have no prepayment penalties, which means you can make additional payments towards your principal without the worry of being penalized for repaying your loan before the due date.
Paying extra on your VA loan can help you in three ways:
- Pay off your mortgage loan early
- Save money by paying less in interest
- Free up cash flow