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Benefits of A VA Home Loan

good benefits of va loansThe benefits of a VA home loan are many. Since the establishment of the loan program as part of the Original GI Bill, 18 million Americans have been able to attain the virtue of home ownership. Without this program, the vast majority of these homeowners would not have been able to qualify for a mortgage. Today, 25 million active duty service members and veterans are eligible for this entitlement program.  Eligibility is determined by military service time, the presence of an honorable discharge and the ability to meet certain underwriting guidelines.  Although this loan has historically maintained a certain level of popularity (exemplified by the three million mortgages it financed in its first eight years of availability), in recent years it has really gained in popularity. The first quarter of this year saw 8 percent of all mortgages purchased in connection with the VA home loan program.  Military members make up ten percent of the entire housing market despite only accounting for nine percent of the entire American population. With the Department of Veterans Affairs estimating the discharge of over a million active duty service members in the next five years, the number of loan applicants could potentially skyrocket.

Because of the numerous benefits provided by this entitlement, the VA loan program is often considered the most advantageous offering available to veterans and active duty service members.

Perks of this loan program include:

Competitive interest rates:  The federal government guarantees every VA loan, resulting in the reduction of accompanying interest rates. Usually, the rates are between 0.5 to a full percentage point lower than with conventional loans.

No private mortgage insurance:  Conventional lenders require borrowers to pay monthly private mortgage insurance. VA loans do not require the payment of PMI.

No down payment requirement:  Traditional loans call for a down payment of as much as 20 percent of the value of the loan. VA loans provide significant savings for borrowers by not requiring a down payment.

No pre-payment penalties: Conventional loans often penalize borrowers who pay off the mortgage prior to maturation; VA loans allow borrowers to pay them off whenever they can.

More lenient credit requirements:  The VA has not set a specific minimum credit score requirement, although this does not mean those with poor credit will qualify, low scores do not equate automatic loan denial. Furthermore, the VA program, usually, only takes into account the prior 12 months of the applicant’s credit history.

Refinancing options:  Borrowers are often able to use the VA loan to refinance an existing loan to a lower interest rate.

Service-related disability options:  Disabled veterans who were injured during their service can qualify to have the required funding fee waived. Active Duty Purple Heart recipients will have their funding fee waived starting January 1, 2020.

To find out about the additional benefits that the VA home loan has for you, or to apply for a loan, contact VA Home Loan Centers at 888-573-4496.