When it comes to which loan you should get, you have a lot of choices. From conventional loans to FHA loans to personal loans, there is certainly no lack of types of loans available today. If you or your spouse is a veteran or an active duty military member, though, you have yet another option: VA loans.
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What Are VA Loans?
VA loans were specifically designed to help veterans and active duty military members and their families be able to afford a home. This opportunity was recently extended to include the National Guard and reservists who have served for at least six years.
As the loan is backed by the United States Department of Veterans Affairs, lenders feel safer when it comes to riskier borrowers. This means that if you’re having difficulty meeting the eligibility requirements for other types of loans but you meet the eligibility requirements for VA loans, lenders will accept your application. Should you default on the loan, the federal government is the one who covers the lender’s losses.
Even if you do meet the eligibility requirements for other loan types, a VA loan is the best choice. Before you start considering other loans, take a look at the benefits offered by VA loans below.
8 Reasons You Should Apply for A VA Loan
#1. No Down Payment
One of the biggest benefits of a VA loan is that there are no down payment requirements. No matter how cheap or expensive the house that you’re buying is, there is no necessary down payment.
As down payments are often one of the most difficult parts of buying a home, this is a huge advantage. Many families can’t afford to gather enough cash for a down payment and are therefore unable to ever own a home. With a VA loan, however, this is no longer a problem.
While FHA loans only require a 3.5% down payment and some conventional loans may allow for as little as 3%, no loan comes close to beating VA loans here. Visit same day loans for fast and low costing loans
#2. No Mortgage Insurance
Low or no down payments are a risk in the eyes of lenders which is why many of them require you to pay for private mortgage insurance. FHA loans require mortgage insurance premiums as a standard while with some conventional loans, you may be able to get away without paying it.
VA loans never have mortgage insurance requirements. Without these extra monthly costs, your loan is made more affordable. You can have a lower monthly payment and know that every penny you pay goes into paying off your loan instead of worrying about it going towards mortgage insurance costs.
#3. Better Interest Rates
Most of the time, VA loans have better interest rates than other available conventional or FHA loans. While you may be able to find other loans that have lower interest by a few percentage points, the slight difference won’t make up for the multitude of other benefits provided by VA loans.
#4. No Prepayment Penalty
The last thing you want to worry about is having to pay a fee if you’re able to pay off your loan ahead of schedule. Unfortunately, many lenders impose a prepayment penalty for those who decide to pay off the remainder of their loan early. This is not the case with VA loans, though.
VA loans have no prepayment penalty which means if you have the option to pay off your loan or you decide to refinance, you won’t have to worry about being penalized by your lender for it.
#5. Easy Refinancing
Refinancing VA loans is easy compared to some other loan types. There’s less paperwork involved and you have a few options that are available to you depending on your situation. In some cases, you may not even need a new appraisal or you may be able to include the costs of refinancing into your new loan.
Even if you start out with a VA loan, you may decide to refinance it in the future. Being proactive and choosing a VA loan will make this possibility easier in the future and even if you decide not to refinance, you can breathe easier knowing you aren’t faced with extra and unnecessary challenges.
#6. No Credit Score Minimum
Every other loan type will have a minimum credit score requirement, but not VA loans. While lenders may ask for a copy of your credit score, the VA does not impose any requirements in order for you to be eligible for a loan.
Since some lenders do ask to see your credit score, it’s recommended that you have a score of at least 580. Again, this is not a requirement so if it’s not possible, look around for other lenders to see if you can find someone that won’t ask for your score.
If you have a problem with your credit score, read and get some insights from this article "credit repair for veterans", posted at Daily Prosper.
#7. Low Closing Costs
Some loan types come with high closing costs that make an already expensive loan even more expensive. Fortunately, the VA limits the closing costs that lenders can charge so you won’t have to worry about paying an exorbitant sum of money just to close your loan. In some cases, the imposed closing costs may be lower than traditional closing costs, though they tend to be close to the same.
#8. Easier Qualification
It can be difficult for some families to qualify for a loan, but it’s easier to qualify for a VA loan. All the eligibility requirements can be found on the VA website and are easy to understand. If you have questions about qualification or you aren’t sure if you qualify, you can always contact your regional VA center for information specific to your case.
Become a Homeowner
With VA loans, your dream of owning a home can become a reality! VA loans are designed to help you and your family and if you qualify, they’re often the best choice. Even if you’re eligible for another loan type, the benefits provided by VA loans are too great to overlook.