It is often seen that people having moderate or low income have to struggle a lot to fulfill their dreams of getting their own homes. Most of them are unable to pay a high down payment, increased interest rates, and private mortgage insurance while applying for a house loan.
However, you can avoid such troubles if you qualify for a VA loan. A VA loan is guaranteed by the United States Department of Veterans Affairs or VA for the welfare of veterans and active military persons. The government provides many concessions to the borrower as well as the qualified lenders who issue this loan. This is the reason that VA is getting more popularity than other loan programs.
Though a fix credit score is not imposed by The Department of Veterans Affairs, yet lenders seek a minimum credit score of 620 or greater to provide home financing at affordable rates. According to VA, to get a home loan, military members and military veterans should have served :
1. 90 consecutive days of active service during a wartime.
2. 181 days of active service during a peacetime.
3. 6 years in the National Guard or Reserves.
In addition to these, you can avail this loan scheme, if you are a spouse of a service member who has died in the line of duty or as the consequence of a service-related disability. To apply for a VA loan, national guard members and reservists have to wait at least 6 years unless they are called up for an active duty. If you desire, you can also take the assistance of VA home loan brokers in Colorado. Their experienced team members are capable to provide you with all types of assistance in this matter.
Why You Should Get a VA Home Loan?
Now, if you qualify for a VA home loan, the following reasons would help you know why you should get this loan:
Where conventional and FHA loans require 5% and 3.5% down payment, a VA loan need not have a down payment in most of the cases.
To get this loan you need not pay monthly mortgage insurance premiums (PMI). But, FHA loan has upfront and annual mortgage insurance charges.
A seller can pay a buyer’s loan-related closing costs without difficulty.
There is no risk of prepayment penalties. Buyers can pay off their loans early without any financial penalties.
The homeowners with existing VA loans have the option to minimize their monthly payment with new interest rates.
The Eligible homeowners who have financed their property with other loan programmes can also refinance into the VA loan program.
Even after using their VA loan benefits veterans can again purchase homes with VA financing through remaining or restored loan entitlement.
For the approval of an assumable mortgage by VA and/or lender, you can have someone take over your mortgage payment. It can be utilized to purchase a new house or existing construction.
The interest rates are 0.5% to 1% less than other conventional house loans.
Apart from these, in case you fail to make your mortgage payments, the VA assists you to avoid going into foreclosure. This loan program has experienced team members who advocate on behalf of you and search alternatives to foreclosure with the agreement of your lender.
How VA helps to save money over the lifetime of your loan?
With conventional mortgage loans, if you make a less down payment, your interest rates get higher that further increase the monthly payment costs. If you fail to keep up with this, you could lose your house. However, in the case of VA loans, the interest rates are lower than traditional mortgages. This helps you save money over the lifetime of your loan. You just need to pay a funding fee at closing in exchange for the options of buying a home without any down payment and lower interest rates. Generally, this fee is a small part of the total cost of a loan. But, it can vary according to your military status and the amount you have put down. If you do not make any down payment, you may have to pay two percent or more of the house’s value. On the other side, if you make a 10% to 20% down payment, you may have to pay only 1% of the house’s value. The active-duty servicemembers usually pay less than other qualified borrowers.
VA home loan lenders in Colorado work closely with the licensed lenders and suggest the best loan scheme for you. You can discuss with them more about VA and its benefits as per your budget and qualification.
Conclusion: From many angles, the VA loan proves beneficial for Veterans and military persons. With the low-interest rates, 0% down payment, safety from foreclosure and other facilities, this loan program enables them to buy a home of their dreams.