Veterans and active duty service personnel have the ability to access a program from the VA to provide home loans. VA loans offer several perks and benefits that are not found through conventional lenders and that provide service men and women with advantages that honor their time and service to the country.
To understand how home loans from the VA will benefit a veteran or active duty service personnel, consider the following features of these loans and compare them to the features offered by conventional lenders for conforming loans.
Private mortgage insurance or PMI is required by most conventional lenders for most loans with down payments of less than 20% of the home’s value. With VA home loans, there is no need for PMI, and there will be no monthly mortgage premium. These added savings mean that qualified buyers can keep their monthly payments low or even add extra to their payments to pay off the loan faster.
No Down Payment
Most loans through FHA (Federal Housing Administration) require at least a 3.5% down payment for buyers with an approved credit score. This score will vary between lenders but can be as high as 620. Conventional loans typically require a minimum of a 5% down payment, with more for lower interest rates.
VA loans, on the other hand, require no down payment at all! Additionally, the seller of the home can pay all related loan closing costs and even provide up to four percent in concessions, which can reduce the cost of the purpose to the buyer significantly.
Assistance With Foreclosure
In the event an individual with a VA home loan finds the home is going into foreclosure, the VA provides advocates to try to negotiate directly with the lender. In most cases, these advocates are able to create an agreement to stop foreclosure and allow the veteran or military personnel to continue to live in the home and catch up and stay current on the loan payments.