The VA home mortgage loan is very similar to a conventional home loan in the sense that it offers financing on the subject property. However, the notable difference is that no down payment is necessary, a funding fee subject to the loan amount and prepayment penalties do not exist.
The Factors that Determine if You are Eligible for a VA Home Loan?
It is available to:
Veterans, during a war, who have served active duty service a minimum of 90 days
Veterans, during peacetime, who have served active duty a minimum of 181 days
Reserve members who have served six years
Veterans who receive a discharge under general conditions or above (not dishonorable).
The advantage of not having to put down a typical conventional loan down payment of ten-to-twenty-percent is a large advantage for most who choose the program. It permits buyers who are financially capable of making the monthly loan payments to finalize their dream of owning a home.
Private Mortgage Insurance (PMI) goes along with conventional loans when people purchase a single family dwelling without a 20% down payment so there is not equity of twenty-percent. The VA funding fee takes the place of (PMI). It is additional insurance which lenders make mandatory. Sometimes, it a very expensive add-on payment to the loan.
Presently, the VA funding fee is 2.15% of the loan amount for first time buyers with a no money down payment. If someone wants a loan of $120,000 on a home, then the final loan amount will be $122,580, and this hardly raises the total monthly payment.
In many occurrences, prepayment penalties are efficiently put into a borrower's conventional loan as they do not always know where to look for it. A prepayment penalty is just a clause in the loan agreement that if the loan is paid off before the expiration date which ranges from one year to five years, then the borrower will be required to pay an additional fee, which is usually six months of mortgage interest.
By using a VA mortgage loan, borrowers need not stress over or become nervous because prepayment penalties are not applicable. Selling your home in one area to move to another is simple and will lessen the stress during the home selling period. It will probably always be this way as members of the armed forces are given orders to relocate at a moments notice. This is an added advantage from buying a home using a VA home loan.
Ray Heinson is a real estate investor and suggests these resources for
VA Home Mortgage Lenders or
FHA Home Loanss from trusted home lenders in your area.
