Created by the 1944 G.I. Bill, a landmark piece of legislation that was used to provide assistance to thousands of soldiers returning from the battlefields of the Second World War, the VA loan system is able to help veteran service members buy houses, make homes and strengthen their roots within their chosen US communities to this very day.
At the latest count, more than 400,000 American service veterans use VA loan assistance, such as va loans florida, to buy a home for themselves and their family each year. With the size of the loan amount in question being of potentially unlimited size, there really is no loan system like it anywhere else in the country.
To see just how life-changing the VA loan system can be, here are some of the biggest and best benefits that first-time homebuyers can expect to enjoy when applying for and being accepted for a VA loan.
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There Is No Down Payment Required
With VA loans, there is an allowance for 100% financing. Home buyers are able to make optional down payments with a VA-backed mortgage, but no deposit is actually required to secure approval for a loan. This can be of great benefit if you are not in the situation to be able to part with a large sum of cash up front.
It also means a VA mortgage is more affordable than renting because a rental property always requires quite a hefty deposit.
Private Mortgage Insurance (PMI) Is Not Needed
The VA loan system makes owning a home accessible and affordable for military veterans. You are not required to budget for ongoing mortgage insurance payments, unlike any other type of government assistance that you might get with a conventional or FHA mortgage agreement.
Low Interest Rates
VA mortgages boast rates that are way below the national average for such help because they guarantee a portion of every loan against loss. The typical VA loan mortgage rate can be as much as 0.25 percentage points below the average of any comparable loan over a 30-year fixed period.
No Minimum Credit Score Requirement
Unlike other types of mortgage loans, the VA loan system does not enforce a minimum credit score requirement on its applicants. Potential buyers with all sorts of credit histories are considered for a loan, with many other factors also being considered important. Outside of this, the norm for mortgage lending is that a credit score minimum of 580 is needed to be approved.
There Are Limited Closing Costs
The VA loan system limits buyer closing fees to just mortgage discount points and third-party costs like essential government fees. If the lender charges a service fee, then it cannot charge for overhead items like notary, postage and any loan settlement fees. VA home buyers can also not be charged for things like attorney fees, third-party appraisals and real estate commissions.
Lifetime Options
A VA home loan isn’t something that you can only take advantage of one time. It is a lifetime benefit of being a veteran that doesn’t have an expiration date or usage limit. Eligible applicants are able to use the loan system to buy their first home, and also any subsequent homes over the course of their lifetime.
Loans Can Be Passed To The Next Owner
VA-backed loans are assumable, which means that they can be assigned to a future buyer to receive the same mortgage rate, even if that buyer is not a veteran. All that is needed is for the new buyer to be able to meet the standard VA income and credit requirements, as well as a potential 0.5 percent fee on the remaining balance of the loan.
Now that you have learned of all of the best benefits of a VA loan, the only thing left to do is research whether or not you are a suitable candidate. If you want some information based on your own circumstances, then you can see it here and also make use of the incredibly helpful WhatsMyPayment tool.
To make their house purchase easier and more inexpensive, first time home buyer VA loan tips who are considering a VA loan can profit from advice like knowing the VA loan procedure, working with knowledgeable lenders, and taking advantage of the no down payment benefit.
