Having used the VA Home Loan Guaranty program several times, I thought it might be a good idea to share some things I have learned that could help you decide if a VA loan is right for you.
The following is a quick list of reasons why a VA loan may be your best option:
- No down payment requirement.
- VA funding fee may be financed in the loan.
- VA Loans do not require perfect credit – there is no credit score cut-off.
- VA funding fees may be waived for veterans with VA rated service-connected disabilities and surviving spouses of veterans with service-connected disabilities.
- Closing costs may be shared between the buyer and lender.
- Flexible mortgage types – fixed, hybrid and traditional ARMs.
- No mortgage insurance premiums – this is huge in today’s housing market.
- VA guarantied mortgages are assumable.
- No pre-payment penalties.
- Homes are inspected and appraised by VA prior to approval and/or during construction.
- VA can offer assistance to veteran borrowers in default due to temporary financial difficulty.
- Refinance and Interest Rate Reduction loans are available.
When I last used my VA loan benefit, back in 2003, the biggest drawback was trying to find a seller who was willing to consider a deal involving a VA Home Loan. That’s because in a “seller’s market” (where there are fewer houses than buyers) some sellers avoid VA loans because of the added red tape - processes and inspections. (As noted above, the VA has added safeguards to make sure veterans get the best value for their investment) Today’s housing market is just the opposite, far more homes on the market than there are qualified buyers, so sellers are more than happy to deal with the rigors of a VA loan.
All in all, the pros far outweigh the cons. And, considering there are very few "no-downpayment" mortgage options around that offer lower associated fees, using your VA Home Loan benefit seems like a no-brainer - as long as the red tape doesn't scare you.
