by Jon Silver
One of the advantages of being a US military member is the VA Home Loan Program that is administered by the Veterans Affairs Administration. The VA mortgage program makes buying a home or refinancing a home much easier for military members and veterans. With VA mortgage rates still very low in 2016, it is possible for many military people to enjoy the benefits of home ownership. Continue reading to learn about VA home mortgages, and the 11 reasons the military has an edge with the availability of military loan programs:
1- VA Loans Are Easier To Qualify For
Most conventional loans sound like a great deal, and they are, but you have to have a higher credit score to get the interest rates you see advertised on TV. For many conventional loans, you must have at least a 720 FICO score to get the best interest rate. Meanwhile, VA mortgages are easy to qualify for. Military loans like the VA are backed by the US government. This means that the government will pay back the mortgage lender if you default on your loan. This means that banks are assuming much less risk by extending loans to people with lower credit scores.
2- VA Program Will Not Deny You on Low Credit Alone
You cannot be denied just because you have poor credit. And most VA lenders will not automatically give you a higher interest rate if you have a low score. Also, the VA program only reviews your last 12 months of credit history, unless you have a bankruptcy or foreclosure in the last few years. Those two issues may slow the approval process, but you still can be approved.
Note that you do need to prove you have sufficient income to pay back the loan, but a low credit score alone will not stop you.
3- No Down Payment Required
One of the biggest benefits of a VA loan is that it is one of the few 100% financing mortgage products left on the market. After the subprime loan crash, most 100% financing instruments disappeared in the mortgage industry. But because of your service, you can qualify for a 100% financing loan.
4- Adjustable and Fixed Rate Mortgages Available
The US government guarantees VA loans, so this attracts a broad selection of mortgage lenders to the VA loan market. You can choose from all sorts of mortgage loans for your specific situation.
If you are only going to live in your home for two or three years (very common for military members), you may opt for an ultra-low interest rate adjustable mortgage. Or if you are retired and plan to stay in the home for many years, you may go for a 30 year fixed mortgage.
5- Start Looking Without Certificate of Eligibility
You do need to have your Certificate of Eligibility eventually to get a VA loan approved and closed. But you can start shopping for a VA loan right now and get that certificate later. Once you have started the loan application process, your mortgage lender can work with the US government to get your certificate.
6- Refinancing Also Available
If you are a current VA loan holder and want to refinance to a lower rate, you can refinance without having to re-qualify. This is known as the VA Streamline Refinance Loan Program.
7- VA Rates Are Low
Because VA loans are backed by Uncle Sam, the banks can offer reduced rates to military members and veterans. VA mortgage rates can be a full point below typical mortgage interest rates. This can save you tens of thousands of dollars over the life of your VA loan.
8- Aggressive Underwriting
Due to the guarantee by the US government on these loans, underwriters for mortgage companies tend to be more flexible with lending requirements on VA loans.
9- No Mortgage Insurance Required
If you put less than 20% of the purchase price down, you usually will have to pay private mortgage insurance. This is a requirement on FHA loans, for example. However, VA loans have no PMI requirement and this can save you $100 or $200 per month on your payment.
10- No Prepayment Penalty
A VA loan does not prevent you from selling your home if you decide you need to move. There are no extra fees for paying off your loan early.
11- Closing Costs Are Low
The VA limits lenders on the closing costs they can charge you. This is another thing that makes VA loans more affordable than conventional loans.
VA mortgage programs are a great advantage of serving in the US military. There are many financial benefits to a VA loan that you have to have been in the military to enjoy. As you are shopping for a home loan, you should be looking at all of the military loan products that are available to you.
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