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Homebuying & Selling
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3 min read
Buying a home can be a stressful process, however, qualifying for a Veterans Affairs (VA) mortgage loan may make the homebuying process easier as there are many perks that the average homebuyer doesn’t receive. Active military members, veterans, and surviving spouses may be eligible for VA loans.
Since VA loans are guaranteed by the federal government, veterans often receive a better interest rate than they would receive with a conventional loan.
As a military veteran, you have worked hard and made unimaginable sacrifices to protect our country and freedom. It's only fair that you receive some benefits in return including buying and refinancing a home.
Here are the top seven reasons military veterans should use a VA loan to finance their home:
1. No down payment required.
One huge benefit of using a VA loan to finance your home is a down payment is not required.
Typically, a Federal Housing Administration (FHA) loan requires a down payment of up to 3.5-5%, if not more. With a $150,000 home loan, you may have a down payment of up to $7,500 at 5% or $30,000 at 20%. A VA loan gives qualified veteran borrowers an advantage in becoming homeowners without spending months, if not years, saving for a large down payment.
2. Monthly mortgage insurance premium payments not required.
Unlike other loans, a VA loan does not require a monthly mortgage insurance premium. Typically, this premium increases your overall mortgage payment and can negatively impact buyers qualifying for a loan.
Typically, homebuyers who do not put 20% down will pay private mortgage insurance (PMI) on a conventional loan or PMI plus monthly mortgage insurance premiums (MIP) on a Federal Housing Administration (FHA) loan. However, VA loans never charge any monthly insurance fee, so you save money every month. For example, PMI insurance would have been $100 per month, that's $1,200 per year you'd save with a VA loan.
Luckily, for veterans who qualify for a VA loan, this is one less thing to worry about when going through the homebuying process.
3. Buyers' closing costs on VA loans are limited.
Part of the expense of buying a home is the closing costs that come with it. While closing costs usually run 2-5% of the home loan amount for most buyers, as a veteran taking out a VA loan, your closing costs are limited. Again, that means you save money! The Department of Veterans Affairs dictates exactly what you will and will not pay and the associated amounts. VA loans require a one-time funding fee, which is waived for veterans who have a service-connected disability rating through the VA.
4. Credit score minimums are relaxed.
When buying a home, your credit score plays a huge factor into whether a homebuyer can get the loan amount they need.
Using a VA loan, veterans and active service members are treated to relaxed requirements. Since the Department of the Veteran Affairs doesn’t directly issue the loans themselves, they do not set or enforce any credit score minimums.
5. Veteran or non-veteran buyers may assume your VA loan when you sell.
If you have a VA loan, when you sell your home, you may allow your buyer—whether a veteran or not—to assume your VA loan. Since non-veterans are not usually eligible for a VA loan and its associated benefits, the ability to assume your loan may make your home an attractive buy. All buyers must qualify for the loan, and veterans who allow non-veterans to assume their loan may lose their entitlement.
6. Veterans can use their VA loan more than once.
A huge perk of the VA loan is the ability to use it more than once. With the VA loan, you can use it to buy a home with no money down, sell the home, and buy another home with no down payment as long as you have enough remaining entitlement.
As long as you continue to qualify for the VA loan, there is no limit on the amount of times you can purchase a home with it.
7. Surviving spouses can apply for the loan.
Surviving spouses can also apply to use the VA loan. If your spouse died during military service, went missing, became a prisoner of war, or died from service-connected reasons, you may be able to qualify for the VA loan.
If you're a veteran or service member looking to use the VA loan for your next home purchase, our pros our available to assist you. Don’t miss out on perks you deserve for your service!
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