Men in the military service are considered heroes. The government recognizes their sacrifices to serve the people in the form of maintaining peace and order. As a reward, they are granted the privilege to make their home ownership dream come true. The VA mortgage loan has been around since 1944. It is one of the flexible types of mortgage loans, and its primary role is to help the veterans and give financial security to the lenders. Lenders approve VA loan because the government pledges to pay 25% of the total loan amount should the borrower defaults in payment. If you are a veteran or a surviving spouse of a military man, then you can apply for a VA home loan. Just make sure you meet all the eligibility requirements for your application to push through.
The perks of taking out a VA home loan
One of the ultimate advantages of VA home loan is the no down payment requirement. The lenders offering VA home loan have a competitive interest rate, possible 100% financing, no repayment penalties, and no private read review insurance. It does have a restricted refinancing loan, which does not require additional underwriting. Although it comes with so many benefits, the veterans do need to pay some fees such as the funding fee and the appraisal fee.
Another purpose of securing a VA loan
The VA loan is not only centered on helping military men purchase their dream home. It can be used for other purposes too such as reducing the interest rate through refinancing. You can also apply for VA refinancing for you to have extra cash to be used for home improvement, emergency, or even in purchasing other properties. However, it should not be used for buying investment properties. Keep in mind that the VA loans purpose is to help military men purchase a place that they can call their home.
Are there any downfalls?
The only negative aspect of the VA loan is the closing cost. It is a disadvantage not for the borrower but for the lender because there are instances when the lender has to shoulder the closing cost. In the conventional loan, the closing price is usually shouldered by the buyer.