One of the most used benefits for veterans and active duty military is the VA loan. If you’re eligible for a VA loan and are thinking about getting one, here are some important things you should know:
●VA loans may be used on most properties. They cannot be used on vacant land and co-ops. Some properties are subject to a lender’s approval (such as a manufactured or modular home).
●VA loans must be used for your primary residence. You can’t use your VA loan benefits for a vacation home or other investment property. You must live in the home if you use a VA loan to pay for the property.
●No down payment. This is one of the best benefits. Saving enough for a down payment can be a big obstacle to buying a home. Having a VA loan eliminates that pressure. Granted, there are some restrictions. In most parts of the country, qualified buyers can purchase up to $424,100 before factoring in the cost of a down payment.
●Limited closing costs. Even though a down payment isn’t required, some money is still required. This money will often come back at closing when the title company writes a check to the veteran that was put into escrow.
●VA loans have no pre-payment penalites. This means you can pay off your loan faster by making extra payments each month, saving thousands of dollars in interest over the life of your loan.
●Loan requirements are more lenient. The required credit score for a VA loan can be lower than for a conventional loan. Additionally, the required devt-to-income ratio for VA loans is often more flexible than for conventional mortgages.
●VA loans have a funding fee, but no monthly mortgage insurance requirement. This a big saver. Most conventional buyers have to pay private mortgage insurance if they put less than 20% down. FHA loans come with their own forms of mortgage insurance. A VA loan waives that insurance requirement which saves the buyer around $200 per month. The funding fee is the cost associated with funding a VA loan. This fee is used to make sure the loan won’t require a down payment or monthly mortgage insurance.
●VA loans may be reused. You can use a VA loan as long as you pay off your existing one.
With our partnership with Allanach/Mortgage Group Corporation (NMLS 2894), we now have the opportunity to better serve you with even more mortgage products! If you’re looking for an FHA, VA or USDA mortgage, click here to fill out the application. For a full list of services, contact the Credit Union at 508.679.0197 or email firstname.lastname@example.org.