VA Loan – Ten Reasons to Take One
If you are an active duty service member or a veteran, you need to understand the advantages offered by taking a VA loan to finance a home. These loans offer ten advantages that are way America extends its thanks to her military members.ONE: No Money Down RequiredOne of the nicest things about a VA loans is that they require no down payment. Some choose to place one anyway. Most other loans have a down payment ranging from 3.5% as for FHA loans, or up to 20% the more conventional loans.TWO: No Closing Costs OptionMost other loan types incur heavy closing costs. These costs: Taxes. Escrow Fees. Inspection Fees. Title Insurance. Homeowner Insurance. Other items. If a loan officer builds the loan offer in a good way, sellers will pick up the closing costs, not the home buyer.THREE: Seller Required/Buyer Non-Allowable Closing CostsShould the buyer choose to pay if the seller refuses, the VA will limit the amount the buyer can pay. Conventional loans can include these fees in the closing costs: settlement fees, document preparation fees, convey and fees, attorney fees, title work, photos, loan processing fees, truth-in-lending disclosure statements, fees for loan brokers, finders or third-party fees, tax service fees, and the list goes on. With a VA loan, most of these costs are not allowed.FOUR: VA Certification of Reasonable ValueAppraisals are a part of any property loan transactions. With conventional loans, one must rely on the appraisal to determine the worth of the property. The VA itself will issue a certificate of reasonable value that is valid to six months.FIVE: VA Home InspectionProperty must be in habitable condition. The VA attempts to protect the buyer from buying property in bad condition. Roof, furnace/ac, plumbing, foundation are all inspected. The VA inspector verifies the property meets all VA codes.SIX: Streamline Refinance for Lower RatesIf you are already a home owner under a conventional VA loan, you could choose to refinance to lower your interest rates. The streamline process allows a refinance without the credit check, employment verification, appraisal, and most documentation (in most cases).SEVEN: No Prepayment PenaltyIf you pay off a home loan early to refinance or sell, you could be stuck with prepayment penalties that can amount of tens of thousands of dollars to the original lender. This cannot happen with VA loans.EIGHT: Capped PointsBrokers and lenders charge service fees to originate the loan. Some call these points. The VA sets a limit on these fees and will not allow a lender to charge anything deemed unreasonable.NINE: AssumabilityDoes a service buddy like your home? Conventional loans require a new loan whenever property changes hands. Under VA rules, you can sell and a VA approved buyer can take over your old loan.TEN: Low Interest RatesInterest rates offered under VA loans are among the lowest on the market, set by the Federal Reserve. Conventional loans have adjustable rates that start around 3% and then may rise to 12%. VA loans never allow payments to vary and your amount and interest rate are locked in the life of the loan.As you can see, the ten reasons for taking a Military loan are pretty convincing. Veterans should use this way that America thanks troops for their service.