Our nation is indebted to those who have served in our armed forces and VA home loans are one of the rewards for their contributions. These loans for military veterans and active duty service members have helped millions enjoy the benefits of home ownership by making it easier and more affordable to get a mortgage.
What Makes a VA Loan Unique?
There is a variety of reasons that this a unique loan, here are a few:
- There is no down payment required. However, the sales price cannot be higher than the appraised value of home.
- Not exclusive to first time home buyers
- There are no private mortgage insurance requirements with a VA mortgage.
- Sellers may contribute towards closing costs in many cases.
- There is no prepayment penalty for paying off a VA mortgage early.
- VA loans are assumable.
Benefits of a VA Loan
VA loans come with a 100% financing guarantee. The entire amount of your home purchase, up to fairly generous limits, VA loans are one of the few ways you can buy a home with no down payment. Because the VA guarantees these military home loans, the lender doesn’t need any cash up front as a hedge against default.
Another major advantage is that VA loans don’t require mortgage insurance. On most mortgages, borrowers have to pay for private mortgage insurance (PMI) if they make a down payment of less than 20 percent of the purchase price of the home. That means additional annual fees equal to about one-half to one percent of the loan amount. Because of the VA loan guarantee, no additional insurance is necessary. The VA loan program insures the loan for you.
Frequently Asked Questions
One thing that we get asked about is Interest Rate Reductions Refinance Loans (IRRRL). VA IRRRL loans allow borrowers with VA mortgages the ability to lower their interest rate without many of the costs and hurdles associated with other mortgage programs. Here are some details on IRRRL refinancing:
- There is no appraisal required with an IRRRL.
- Borrowers may be able to roll any costs into their loan amounts or take on a higher rate in order for a lender to pay any associated loan expenses.
- No cash-out is available from a VA Interest Rate Reduction Refinance Loan.
Another question we hear is based around what type of credit you need to qualify. You don’t need great credit, a review of your credit history is part of the underwriting process. To qualify, borrowers should be able to show a history of paying their bills on time.
When You Should Consider a VA Loan
VA loans offer zero down mortgage solutions for eligible active duty servicemen and women, military veterans, and surviving spouses. Call Mid America Mortgage for more information on VA loans and the process!