Regardless of your background and financial situation, you should look for opportunities to help you get a mortgage with more favorable terms. This is especially true for those who qualify for VA loans. Veterans who might not otherwise qualify can get a mortgage through this government program. Additionally, you may qualify for other perks that will help you step into the path of homeownership. Here are a few specific benefits of applying for a VA loan.
Get a Home With Zero Money Down
Even the best home buyer programs require some type of down payment. Without using a government assistance program, traditional banks require that applicants contribute a 20% down payment. Most government programs allow buyers to offer as little as 3% down, but that’s still money that has to come out of their pocket.
Taking advantage of VA loans in San Diego will allow you to finance 100% of the home purchase. While that can be a big help in getting you in a home of your own, you should remember that financing more of the sale price means higher monthly payments. As long as you’re prepared for that option, this can be a worthwhile incentive.
Buy Without Private Mortgage Insurance
When a traditional lender offers a mortgage to a buyer, they require the buyer to pay for private mortgage insurance or PMI as a part of the closing costs. This is insurance that will allow the lender to recoup the money they lost if the buyer defaults on their mortgage.
Since VA loans are backed by the U.S. government, there’s no need for PMI fees. If a veteran does default on their mortgage, the government will step in and repay the lender. Since there’s no risk to the bank, they can offer the mortgage without requiring PMI coverage.
You Can Find Your Own Lender
While the government sponsors the program, it is not the actual lender. This works out well for buyers because it allows them to browse loan offers from banks, credit unions, and other financial institutions anywhere in the country. Each lender will offer different VA loan rates and terms, so it is beneficial to browse for the best terms.
Don’t assume that one bank’s terms are representative of every bank’s VA loan program. Shopping for better deals online and in your own community can help you find the most favorable terms for your situation.
Most People Can Qualify
While you will still have to meet certain standards to qualify for a VA loan, those standards are lower. For example, lenders will still look at your credit score, but it may not have to be as high as it would have to be in determining your eligibility for a traditional loan. Due to the government’s backing of the loan, lenders have a little more flexibility in who they can approve.
This means you won’t have to maintain a perfect credit score to qualify for a loan through the VA program. It’s also not uncommon for lenders to approve borrowers who have a bankruptcy, foreclosure, or short sale on their credit report. This is another reason it’s important to research a variety of different lenders. Where one lender may not approve your application, other lenders will have lower requirements.
You Never Lose This Benefit
Imagine you bought your current home through the VA program and you’re now interested in buying a second home as an investment or vacation property. You can still use the program to buy any future real estate you choose to purchase. It’s a common misconception that you lose your eligibility once you use a VA loan to buy a home.