VA loans are a guaranteed mortgage loan and are backed by the U.S. Department of Veterans Affairs. They allow veterans, active-duty military members, and even spouses of military personnel who have died on active duty to own homes at an affordable cost.
VA loans offer several benefits, some of which are:
No down payment is required
Unlike FHA loans or conventional loans, military personnel & veterans can purchase a home with a VA loan without needing to make any down payment for the home of their dreams. This saves them a lot of money and prevents them from having to defer their dreams while trying to save up for the down payment amount.
Competitive interest rates
Because the U.S. Department of Veterans Affairs backs each VA loan, lenders can charge interest rates that are typically 0.5 to 1% lower than the conventional interest rates. This results in greater savings.
No mortgage insurance
Unlike an FHA or conventional loan, which requires one to pay mortgage insurance per month, especially if you haven’t built up 20% equity, VA loans don’t require payment of mortgage insurance. This, again, translates into more money saved on such loans.
Flexible credit requirements
There is no minimum credit requirement set by the Department of Veterans Affairs (VA) for a VA loan. However, mortgage lenders who fund the loans will have credit requirements that the military/veteran homebuyer must meet.
Limits on closing cost
VA loans limit how much borrowers can be charged when it comes to closing costs and fees. The buyer can ask for seller contributions toward the buyer’s closing costs to pay the loan-related closing costs and up to 4% in concessions of the appraised value of the property.
No penalty for pre-payment
If you suddenly find yourself flush with cash, you can pay off your loan amount without paying any pre-payment penalty.
VA loans can be used for life. They’re not one-time offers for veterans to use. It’s possible to have more than one VA loan at a time, even if you haven’t repaid the previous one in full. This typically applies to active service members who receive PCS orders.
If you’re looking to buy or sell a home in the Twin Cities, or the surrounding areas, you may want to consider working with a Certified Military Relocation Professional and Veterans Association of Real Estate Professionals (VAREP) – Veterans Certified Agent like Shannon Lindstrom, Realtor®, AHWD, CRS, GREEN, MRP, VCA, whose track record of success, professional training, and dedication to military and veteran clients is unmatched in the Twin Cities and suburban real estate market.
Shannon Lindstrom, Realtor®, AHWD, GREEN, MRP, VCA