There has been a surge in the popularity of VA mortgage loan offers in recent years. While not the only beneficial category for obtaining low interest, advantageous loans, the VA market offers a few advantages that make it the #1 choice for many homeowners who are currently experiencing difficulties with their financial situations.
In most cases, VA mortgages require no down payment, and they can reduce your interest rates considerably. If eligible, future homeowners can also gain the advantage of a speedy process, no requirements for a private insurance and the benefit of gaining an assumable mortgage.
What Is a VA Mortgage?
A VA home loan is essentially a loan created by private lenders that offers long-term financing options for American veterans and servicemen, as well as their spouses – as long as they do not remarry.
These loans are partially guaranteed by the US Department of Veteran Affairs (VA), and they can be used to purchase VA-inspected properties which are typically located in countryside and smaller urban areas.
VA mortgages are currently among the only types of loans available for individuals who don’t have enough money for a down payment. Typically easy to qualify for when compared to regular mortgage loans, they are already being used by millions of active service members and veterans throughout the USA.
The Main Advantages of A VA Loan
A VA mortgage has several advantages you won’t find in a regular mortgage loan that receives no backing from the State. Aside from the fact that there is no minimum credit score required, mortgage loans guaranteed by the VA can offer several other enticing benefits:
- Unless the price of your property is more than the reasonably accepted purchase value, or the lender demands it, there is no down payment required for these types of loans.
- Interest rates are negotiable, and the borrower has the right to prepay VA mortgages without any penalties.
- There is no private mortgage insurance (PMI), which means that the Federal Government backs all VA loans, and supports the risks that would normally be covered by PMI.
- The VA sets a well-defined limit on how much you can be charged for closing.
- Active service members can count on Basic Allowance for Housing to pay some or all of their monthly mortgage payments associated with VA loans.
- VA mortgage loans are assumable loans. When you sell your property, the buyer can take over the loan without any significant change in policy.
Eligibility is an integral part of understanding VA mortgages. In essence, you have to be either a member of the military, a veteran or a National Guard member to be eligible to apply for a VA loan. Spouses can also apply, including the spouses of active members and veterans who have died either during active duty or as a result of a service-related disability or injury.
While active duty members only need six months of active service to apply, members of the National Guard and reservists have to wait for six years.
A Certificate of Eligibility has to be obtained before anyone can apply for an actual VA mortgage, however, lenders can, in many cases, offer their assistance in order to obtain the document on behalf of the borrower during the pre-approval process. The best way to find out if a VA loan is the right choice for you is to talk to a certified VA mortgage specialist like Maureen Martin, who can help you find the mortgage that best fits your needs.