For many Americans, the dream of owning a home is a significant aspiration. However, this can be challenging for some individuals, especially those who have served in the military. Fortunately, an exceptional program provides extra assistance to veterans and current active service members in achieving their property-owning dreams. This program is known as a VA loan.
What is a VA loan
A VA loan is a type of mortgage loan that is guaranteed by the US Department of Veterans Affairs (VA). This type of loan is designed to help active-duty military members, veterans, and their eligible spouses buy, build, or refinance a home.
The VA loan program provides home loans with guaranteed benefits that can help in buying, building, repairing, retaining, or adapting a home for personal primary occupancy.
Here are the benefits
One of the most significant benefits of a VA loan is that it allows individuals to purchase a home without committing to any down payment. This is particularly beneficial for people who don’t have a store of savings to dip into, as a down payment can be a significant barrier between being a renter and a homeowner. With VA loans, no down payment is required to seal the deal on a new home.
Another great benefit of a VA loan is that it eliminates the need to buy Private Mortgage Insurance (PMI). PMI is usually required in property transactions that involve down payments under 20% of the total house value/mortgage. However, not having to pay for this unnecessary extra step means that veterans can significantly save on their monthly housing costs.
What are the terms
VA-backed loans can also offer much more competitive terms and mortgage interest rates than other lenders. This is because VA loans are guaranteed by the government rather than by a private lending firm. As a result, veterans can save a significant amount of money in interest over the life of their loan.
A word about closing costs
Veterans do not have to worry about most closing costs associated with the home-buying process within the VA loan system. Closing costs can typically be up to 3% of the total value of the sale. However, this is much closer to 1% with a VA loan. These percentages can significantly affect the finances of individuals purchasing a home priced at around $350,000.
If you think you could benefit from a VA loan, you first need to ensure that you are entitled to the help you think you are. You can do this by visiting a website like WhatsMyPayment and using their simple VA loan calculator tool. Input all relevant information, and the calculator will provide an outlook of what you can expect to receive if you apply for a VA loan.
To obtain a VA loan, you will need to meet the eligibility requirements set by the VA, which can include having a minimum period of active duty service, obtaining a Certificate of Eligibility (COE), and meeting credit and income requirements.
You can apply for a VA loan through an approved lender or directly through the VA. The VA website provides information on how to apply for a VA loan and also offers a tool to help you find approved lenders in your area.
A VA loan is an excellent opportunity for veterans and current active service members to achieve their homeownership dreams. The program’s benefits make it an attractive option, including no down payment, no need for PMI, competitive terms and mortgage interest rates, and minimal closing costs. If you are eligible, take advantage of this opportunity and happy house hunting!