For most military vets and active military, VA loans are one of the best financial tools to buy a home on the market. A VA home loan is backed by the Veteran’s Affairs Administration. A VA mortgage is normally a no down payment loan that offers housing affordability with competitive low VA loan rates.
Given how great the VA loan program is for vets who want to buy a home, you might think that everyone in the military knows about VA loans. But there are still some in the military who do not know all of the reasons to get a VA mortgage.
Here are some great reasons you should buy your home with a VA loan:
#1 – You Can Reuse It
Many people think that a VA loan can only be used once. Nope! While it is true that you can only have one VA home loan at a time, you can reuse the benefit over and over, as long as you pay off the loan every time.
Also, you should be able to get another VA loan even if you lost a home to foreclosure. There also are limited circumstances where you may be able to get a second VA loan while still holding the first. You should talk to your VA-approved home lender for details.
#2 – 100% Financing with No Down-Payment Required on VA Loans
For most vets, the best part of the VA home loan is that you do not have to put any money down. This makes buying a home so much easier for millions of veterans as a 100% mortgage enables the borrower to conserve their savings. You will need to pay closing costs, but with no money down, paying 2-4% of the loan amount in closing costs is much more doable for most people. The VA loan requirements are reasonable and the credit standards are much easier than most conforming guidelines.
#3 – Low VA Loan Rates with Fixed Rate Terms
You can enjoy a very low rate that is under market rates most of the time, and it is not dependent upon your credit.
The VA loan rate is often lower than an FHA rate. Your military service really can save you a lot of money!
#4 – You Can Get a VA Mortgage with a Foreclosure
Because you served in the military, the US government provides you with the VA loan benefit. Even if you have had a foreclosure or a bankruptcy, this will not necessarily be an obstacle to getting a loan.
You will just need to show the lender that you have sufficient income for the loan. Also, you should be able to show that you are back on your feet financially, with no late payments on your bills in the last year. But because you served your country, you can have a foreclosure on your record and still get a VA home loan.
#5 – No Mortgage Insurance on VA Loans
Most Americans need to pay mortgage insurance if they put less than 20% down on their home. The VA guarantees the loan, so VA lenders do not require you to have mortgage insurance.
This is a very nice benefit; it will easily save you at least $100 per month over the life of the loan.
#6 – There Is No Prepayment Penalty
If you want to make extra payments on your loan, you can do so. This can result in you paying off your loan years early if you are smart. This could save you many thousands of dollars in interest over the life of the loan.
If you pay just an extra $100 per month, this can save tens of thousands of dollars off in interest.
#7 – Mandatory Fee Required
While you do not have to pay for mortgage insurance, you do need to pay the upfront VA Funding Fee. In most cases, you will need to pay approximately 2% of the loan amount up front.
This VA loan closing cost also known as a VA funding fee can be rolled into the loan, and even can be waived if you have a disability related to your military service.
The funding fee is needed to keep the VA loan program afloat and is mandatory for both purchases and refi’s.
#8 – VA Loans Are Not Issued by the VA
The VA does not actually loan money. All it does is guarantee the loan for each qualified loan. This simply means that if you were to not pay on the mortgage, the VA will pay back the lender.
Therefore, the lender is willing and able to provide you with very reasonable terms for a VA home loan.
#9 – It Is for Owner Occupied, Single Family Homes
If you want to buy a farm, a deli or fixer upper home that needs a lot of work, you may need to find another option. The VA loan is a great first option for you if you are seeking an owner occupied, single family home that is ready to move in.
Remember, if you want to buy an investment property, you will need to find another finance program, because VA home loans are only for owner occupied and single-family houses.
The Bottom Line
If you are a vet, you cannot do better than a VA loan to save yourself money in the long and short term. Shop around with various VA-approved lenders to see which loan works best for you. Some lenders can have better terms than others, so you always will benefit by going loan shopping.