Why Should a Veteran Use a VA Loan to Buy a Home?

The Department of Veteran Affair loan, or VA loan, is an excellent option for potential homeowners who are currently or formerly served in the Armed Services. There are many advantages to VA-loans that make using this program a viable option for Veterans. These loans do not provide Veterans with money; rather the VA guarantees loans made by private lenders, such as banks and mortgage companies. The VA loan protects the lender’s investment if the borrower defaults, which provides security for the Lender and makes it more likely for the Veteran to be approved for a home loan.

VA loans save Veterans money. Since the loan is guaranteed by the VA, it replaces the protection the lender receives from the down payment. Because of this VA-loans require no down payment. Another way these loans save Veterans money is that the government limits the amount of closing costs and other fees that a lender can charge a borrower. This protects the borrower from being overcharged. There are usually no up-front, out of pocket fees in a VA loan. Most closing costs can be paid by the seller of the property, but if closing costs are being paid by the Veteran, they are usually lower than with other types of loans.

VA loans have lower monthly payments. The VA prohibits lenders from requiring private mortgage insurance. Other loans typically have mortgage insurance which can run at several hundred dollars a month, but since the VA guarantees the loan, there is no need for the insurance. VA-loans often have lower interest rates than conventional loans, which results in lower monthly payments. There is also never any pre-payment penalty assistance with a VA-loan. Other loans typically penalize a borrower for paying off their home loan early.

There are many other advantages to a VA loans besides just saving money. Even with bad credit, a Veteran could still be approved for a VA-loan. If a Veteran has been up to date for the past year on their bills, they could still be approved. Since with VA loans, rates are not affected by credit scores, a Veteran with a low credit score can still receive a low interest rate. VA loans also have assumable mortgages. If a Veteran sells his/her home, their mortgage can be assumed by the buyer. This can help with the marketability of the Veteran’s house, making it easier to sell. VA loans also require appraisals to be completed by a VA appraiser. These appraisers are picked at random while with conventional loans the appraiser is picked by the Bank or Mortgage Company, which could result in favorable results for the lender and not the Veteran. By having the appraiser picked randomly, the Veterans interests are being protected.
These are just a few of the advantages that Veterans can have with a VA-loan.

Eric Kandell has helped thousands of U.S. Veterans get approved for VA refinance loans and VA streamline refinances. Hopefully the article above provides you some insights that help you take advantage of the Veteran Benefits you are entitled to because of your service in the United States Military.

Article Source: http://EzineArticles.com/3425428