Many buyers do not understand what advantages there are when it comes to Veterans Administration Home loans. The following is a breakdown of the top 10 advantages of a VA loan as compared to a conventional or FHA financing.
1. No Money Down Required.
There is no down payment required for a VA loan. If the veteran chooses to do so, they may put a down payment. However, the down payment is not a requirement for purchase. Many other loans have a down payment of 3.5% (FHA loans) of the purchase price to 20% of the purchase price for conventional loans.
2. No Closing Costs Option.
There are many closing costs that are required with other loans. Closing costs include Homeowners Insurance, Title Insurance, Inspection Fees, Escrow Fees, Taxes etc. If the buyer structures a VA home loan offer to purchase the ideal way, the closing costs will be paid for by the seller and not the buyer. On average, the closing costs can exceed 3-5% of the purchase price of the home.
3. Seller required / Buyer Non allowable Closing Costs.
Even if the buyer chooses to pay the closing costs (or the seller refuses to pay), the VA will limit what closing costs the buyer can pay. In a conventional purchase transaction, the buyer may be charged for the following: Loan closing or settlement fees, document preparation fees, preparing loan papers or conveyance fees, attorneys services other than for title work, photographs, loan application or processing fees, fees for preparation of truth-in-lending disclosure statement, fees charges by loan brokers, finders or other third parties, and tax service fees. However, with the Veterans Administration Home Loan, all of these costs are not allowed.
4. VA certificate of Reasonable Value.
When purchasing a home using a conventional loan or using cash, you will have to rely upon the appraisal as a means to determine the properties worth. The Veteran Administration will issue a certificate of reasonable value. This certificate is good for up to 6 months.
5. VA Home Inspection.
During the appraisal, the VA inspector will verify that the property meets all Veterans Administration codes. The property must be in habitable condition. The VA protects the buyer from buying a property that is in bad condition. The VA inspector will examine, the roof, the furnace, the plumbing etc.
6. Streamline Refinance for Lower Rates.
If you (the VA buyer) have purchased a home using your VA loan, you can choose to refinance to lower your interest rate. The streamline process allows you to refinance without a credit check or employment verification, without most documentation and without an appraisal (in most cases).
7. No Prepayment Penalty.
Most conventional loans require a prepayment penalty. This means if you refinance or sell the home, the lender may charge you fees for doing so. In some cases, this can be as much as tens of thousands of dollars.
8. Points Capped.
Most lenders or loan brokers will charge a service fee to originate a loan. These are commonly referred to as points. The VA has a set limit on loan origination fees. The VA will not allow a lender to charge you above what they feel is reasonable.
All VA loans can be assumed by other veterans. Conventional loans require that a new buyer obtain a new loan. The VA will allow you to sell your property and have the new buyer take over your old loan.
10. Low Rates.
The Veterans Administration Home Loans usually have very low interest rates. These low rates are in part set by the Federal Reserve. Many conventional loans have adjustable rates that start out at 3% and may exceed 12%. A fixed rate VA Home Loan will never increase. Your payment will remain the same for as long as you own the loan. Your interest rate is locked for up to 30 years.
Given the facts presented, Veterans Administration Home loans offer the best way to purchase a home.
To Apply For VA Loan, visit http://www.vahomeloancenters.com. To view the article in in its entirety please the VA Home Loan Centers blog. Philip Georgiades is the Chief Loan Originator for VA Home Loan Centers San Diego.Philip has been helping families purchase their homes for over 15 years.