The VA home loan program is one of the most powerful loan programs in the US, and every year several veterans, active military members, and their spouses take advantage of the loan program to buy homes. In fact, demand for these loans has spiked over the last few years, especially in cities such as Texas and Florida. In this blog post we explore the benefits of VA home loans over conventional loans.
1. Zero Down Payment Facility
Borrowers often procrastinate their home buying decisions due to the down payment fees involved. Typically, the down payment is 3 to 5 percent of the loan amount, and not all borrowers have such a huge amount readily available to pay upfront. This, however, is not a concern with VA loans as they require borrowers to pay zero down payment fees.
2. Bad Credit Scores Don’t Matter
What may be considered as a bad, or not-fit-for-lending credit score, may still qualify for a VA home loan. The credit score requirements for obtaining VA loans are much relaxed as compared to conventional home loans. To obtain a VA loan with a bad credit score, talk to one of the VA loan experts and they can help you with your application.
3. Pay No Private Mortgage Insurance
Conventional home loan borrowers are required to put down 20 percent of the loan amount or pay a monthly private mortgage insurance. Lenders require borrowers to pay the monthly insurance to protect themselves from any possible defaults in payments. VA loans, on the other hand, are already backed by the VA, and therefore, do not require borrowers to pay any private mortgage insurance premium.
4. Competitive Interest Rates
The risk profile of a borrower is one of the most important determinants according to which lenders fix interest rates for borrowers. Lower the risk associated with a borrower means the lender will charge a lower interest rate. Not only do veterans and military personnel have a low risk profile, their loans are also backed by the VA. As a result, lenders offer them interest rates that are 0.5 to 1 percent less than conventional loan rates.
5. Zero Pre-Payment Penalty
Most home loan lenders charge borrowers a penalty for prepaying their loans before the end of the repayment term. It helps lenders recoup a part of the interest they lose when the borrowers prepay their loans. As a VA loan borrower, you need not worry about the prepayment penalty as VA loan lenders do not charge any such penalty.
Last Few Words
Most veterans assume that VA loans are popular only because of competitive interest rates. They, however, are not aware of other benefits associated with such financing. As a result, there are still many veterans who opt for conventional home loans that cost them way more in interest charges and other fees. Get in touch with a VA approved lender to find out if you qualify for a VA home loan even with bad credit whenever you have a home loan requirement. They will help you navigate the requirements and expedite the approval process.