Buying a home is a dream which every American harbors in his/her heart. However, buying a home is pretty expensive. It is probably the most expensive purchase that you are ever going to make. Most of the times, you would probably go for a mortgage loan from a lender. Now, when it comes to mortgage loan, you have access to a number of options like conventional loans, FHA Loans, USDA Loans and VA Loans. If you are a veteran or an active duty member of the United States Military, then you would find that most people would recommend you to go for a VA Loan. Well, there is no point denying the fact that VA Loans are perhaps the easiest way to buy a home for military home buyers as it comes with several benefits like zero down payments, low interest rates, and no mortgage insurance. Here in this post we would be looking at some of the basic but important facts that you should know about the VA Loans program.
Who offers the loan?
VA Loans are administered by the Department of Veteran Affairs (VA) of the U.S. Federal Government. Although they are known to be VA Loans, the Department of VA doesn’t actually offer the loan. The loans would be offered by banks and other financial institutions that can extend financing on homes through the VA Loans Program.
How Does VA Home Loans Work?
The Department of Veteran Affairs (VA) would provide the guaranty to the loan taken by military vets. It would pay a portion of the loan to the lender if you are unable to pay back the loan.
To take a VA Loan, you would need to have the Certificate of Eligibility (COE) and certain other documents. You need to get in touch with a VA approved lender and get pre-approved. The pre-approval letter would tell you how much loan you can get. Once, you have the pre-approval letter, you can get in touch with a real estate agent and get into contract to buy the home you desire. Once you are done with that, you can apply for the home loan. You get the loan and then you pay for the mortgage every month. You complete the tenure of the loan and then you can close the loan and the property becomes yours. It’s that simple!
Who offers the loan?
VA Loans are administered by the Department of Veteran Affairs (VA) of the U.S. Federal Government. Although they are known to be VA Loans, the Department of VA doesn’t actually offer the loan. The loans would be offered by banks and other financial institutions that can extend financing on homes through the VA Loans Program.
How Does VA Home Loans Work?
The Department of Veteran Affairs (VA) would provide the guaranty to the loan taken by military vets. It would pay a portion of the loan to the lender if you are unable to pay back the loan.
To take a VA Loan, you would need to have the Certificate of Eligibility (COE) and certain other documents. You need to get in touch with a VA approved lender and get pre-approved. The pre-approval letter would tell you how much loan you can get. Once, you have the pre-approval letter, you can get in touch with a real estate agent and get into contract to buy the home you desire. Once you are done with that, you can apply for the home loan. You get the loan and then you pay for the mortgage every month. You complete the tenure of the loan and then you can close the loan and the property becomes yours. It’s that simple!
VA Home Loan Down Payment
One of the biggest advantages of VA home loans is that you don’t have to pay for any down payments in most cases. The VAhas ‘limits’ on the maximum amount it can guarantee. In most cases, if your loan amount is below the VA Loan Limit, then you don’t have to pay for any down payment. The VA Loan Limits differ from county to county and it depends on the local real estate market. So, in certain high cost counties like San Francisco, CA you can expect to get a loan of as much as $625,000 without paying any down payment.
However, paying a down payment does have its own advantages. For example, the more down payments you pay the less VAfunding fee you need to pay. For example, if you are a veteran and you are taking a VA Loan for the first time, then on a loan of $100,000 you would need to pay a funding fee of 2.15% of the loan amount as down payment, which comes around $2150. However, if you pay 10% or more down payment, you would only need to pay 1.25% of the loan amount as funding fee.
VA House Loan Rates
The VA interest rates are typically lower than conventional loans as the loan would be guaranteed by the government. There are two types of interest rates for VA Loans. The first one is a fixed rate interest, where the interest rate stays constant throughout the tenure of the loan. The second is the Adjustable Rate Mortgage (ARM) where the interest rate can change based on theprevalent market conditions. You can always get in touch with a VA Loan specialist to know which type of loan would work thebest for you.
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