Veteran’s Administration Loans

va loans, veteran's administration mortgage loan

Why you should take advantage of your Veteran status for a home mortgage loan.

The single biggest barrier to a young couple or any potential buyer for that matter, when buying their first home is saving up for a down payment. With conventional loans, home buyers can get away with only making a 5 percent down payment. However, with a down payment of anything less than 20 percent, PMI (private mortgage insurance) payments are required. To make a 20 percent down payment on a $300,000 home, you would need to save up more than $60,000 (especially since closing costs on that loan will probably be around $10,000). While many people can make monthly mortgage payments with little financial difficulty, forking out over $60,000 all at once is much less feasible.

The VA loan program addresses this barrier by offering a no-down-payment option. You can get a mortgage with a 0 percent down payment through VA loans. With a new purchase loan or a cash-out refinance, you’ll still have some closing costs to pay, but in most cases, closing costs can be financed into the loan. Even when the borrower makes no down payment, the VA loan program does not ever require any mortgage insurance, which helps keep your monthly payment lower. Instead, they will charge the VA funding fee, but this is only paid upfront and can be waived entirely for service members with service-related disabilities.

Another huge financial benefit of VA loans is the lower interest rates. VA loans tend to have the lowest interest rates of any home loan program. This difference could save you thousands by the end of your loan.

In summary, here are a few unique financial benefits of VA loans:

      1. No down payment
      2. Lower interest rates
      3. No PMI
      4. Closing costs can be financed into the total loan amount
      5. You will need to obtain a termite report and clearance on all purchase and refinance VA Loans.  All section 1 and some of section 2 will be required (your seasoned professional realtor and loan agent will know what will be necessary)


Karen Douglas