The constant fluctuations in real estate prices and mortgage rates discourage many people to buy residential property by taking a loan. Only the people with a steady income source and good credit score can think of taking advantage of the falling mortgage rates. But the members of the Armed Service can easily buy residential property at a lower price through the Veterans Affairs Home Mortgage Loan program. In comparison to the conventional loans, a VA mortgage loan offers a number of additional benefits. Also, the distinct mortgage benefits can be availed by the veterans, active-duty service members and the unmarried surviving spouses of veterans killed while on active duty.
- Zero Down-Payment:
While taking a conventional mortgage loan, a borrower has to pay 10% to 20% of the original total loan amount as down payment. So a borrower has to save a substantial amount of funds, before applying for a conventional mortgage loan. On the other hand, a VA mortgage loan can be raised by a borrower without making any down payment. As the loan is backed by the federal government, the lenders do not ask for any down payment. Also, the lenders often offer 100% financing for a VA mortgage loan.
- No Impact of Your Credit Score:
Your credit score is used by many lenders as the primary criterions to accept or decline your loan application. The people with low credit score often find it a daunting task to get credit. Many borrowers even raise credit by paying a higher interest rate only due to their low credit score. But a VA mortgage loan can be granted by the lender without considering the borrower’s credit score. The VA program only evaluates the previous 12 months of credit history. So a qualified lender can get this mortgage loan option despite having a low credit score.
- PMI not required:
Similar to loan payment, the lenders also do not require any private mortgage insurance (PMI) on the VA loans due to the government guarantee. While taking a conventional mortgage loan, the PMI often enhances the expenses of the borrower. Sometimes a borrower has to finance over 80% of the property value towards PMI. At the same time, you also have options to shop for good mortgage rates. As the VA Loan is backed by the government, the lenders take a lesser amount of risk. So you can easily negotiate with the lenders for a much lower rate of interest.
- Options to Refinance the Mortgage Loan:
Under certain circumstance, a borrower is also allowed to take more than one VA loans. You can simply pay the initial property loan off, and obtain the required authorization from the Winston-Salem Eligibility Center to get multiple VA loans. Also, you choose from several VA loan refinance options to reduce the rate within the VA program. You can even enjoy the refinancing options without qualifying for the specific program under VA Streamline Refinance Loan. Based on your needs, you can also choose from several VA loan types after understanding the pros and cons of each mortgage loan.
The VA mortgage loan rates vary from one state to another. Also, the qualification and eligibility criteria also vary based on the types of VA loan selected by you. However, you can always choose the right option to possess a residential property without paying a high mortgage rate.