The benefits of a VA Home Loan - Finance

Posted by publisher on March 30th, 2012

No Down Payment

One of the greatest advantages of getting a va home loan is that there isn?t any down payment requirement. In the current mortgage market, it?s nearly impossible to find a home loan that will allow for deposit. The closest thing to that is the 3.5% required deposit for a FHA home loan.

Today, it may be very hard for many families to raise the money for any down payment. In many cases, lenders would prefer that a sizable 20% down payment be made. This is often extremely difficult for those who are barely in a position to save any money over these tough economic times. The rent that they are paying could be far better allocated to a mortgage that helps build equity in a house.

No PMI

A substantial expense for anybody putting under 20% deposit on a home is the PMI (private mortgage insurance). This really is insurance that will spend the money for lender the rest of the amount around the loan when the borrower neglects to do so. This insurance has no benefit for that borrower whatsoever. It is just for the lender?s benefit.

The price of the premiums for PMI could be a significant part of the loan. For many people, it needs to be taken care of many years until the loan balance is below 78% of the worth of the home. With a va home loan, the PMI is not required even if there is 100% financing for the home.

Closing Costs to Seller

One of the greatest expenses for any home loan is to pay the settlement costs. There are plenty of fees that have to be paid to be able to purchase a home. A number of them range from the appraisal, termite report, and several other fees. Generally, the borrower is going to have to pay for all of these expenses.

Using the va streamline, it is possible to possess the seller cover part of the settlement costs. This can especially be helpful if the home is situated in a place in which the housing industry continues to be soft. The vendor may be motivated enough to pay for section of the closing costs in order to complete the sale. The seller?s payment of closing costs is allowed with this home loan.

Guarantee

One of the reasons why lenders like to approve a va home loan is that there is a guarantee for much (or all) of the loan amount. Although the amount that will be guaranteed by the federal government is limited depending on the region of the country, the lender is free to make a loan of any amount. This means it is possible to have a loan that is partially guaranteed by the government.

In practice, this means the maximum loan amount in most cases will be whatever the federal government is willing to guarantee. The borrower must have great credit as well as an impressive debt to income ratio that is usable for the VA loan program.

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