VA Home Loan-Aren't Veterans the Lucky Ones?

As a thank you to our military service people, the government has set up VA home loans programs to help veterans buy their own homes. All veterans need to do to qualify for VA home loans is to fill out a VA home loan application. Do you qualify for a VA home loan? Will it help you to get your first home loan, or refinance your current one?

What are VA Home Loans?

VA home loans are home loans that are insured by the Department of Veterans Affairs branch of the US government. A veteran of the US armed services is qualified to apply for a home mortgage loan through VA services.

VA loans are popular because they require lower down payments than traditional home loan options. They also have lower monthly payments than their traditional counterparts, because they do not require Monthly Mortgage insurance, which other loans do. The VA home mortgage loan rate is usually the same as other mortgage options.

Feature of VA Home Loans

There are several features of loans that qualify under the VA home loans program. If you are a veteran and the loan you want falls into these qualifications, you might want to consider getting a VA home loan.

Limit

VA loans have an upper limit of $417,000. This limit was established on January 1, 2006. However, those applying for a loan in a high cost metropolitan area can get approval for $625,500 for their VA loan.

No Money Down Option

One of the things that draws so many veterans to VA home loans is the fact that there is no required down payment. You can by a home using a VA home loan with little to no money up front, and the normal PMI mortgage insurance is waived for veterans.

Lower Rate for Veterans with Bad Credit

Bad credit VA home loans are popular with veterans because they can usually receive a much more competitive interest rate with a VA loan than with other bad credit home loan options. In fact, those who qualify for VA loans and have worked to improve their poor credit history can often qualify for the same interest rate as someone with great credit, when they use the VA options.

ARM Option

The VA loan assistance program offers either a fixed or an adjustable rate mortgag e option. When interest rates are high, veterans can take advantage of ARM mortgages, and then refinance to a fixed loan when the interest rate drops.

VA Loans Vs. Traditional Loans

So, is a VA Loan a good option? How do they compare to traditional home mortgage options?

On of the main differences between VA loans and traditional loans is that with a VA loan you do not have to put down any money upfront. In traditional loans, unless the homebuyer puts down 20% or more, they will have to pay a fee called Private Mortgage Insurance for their loan. With VA loans, this fee does not exist.

Interest rates for VA loans and other loans are competitive. The one benefit of using the VA program is when you are applying for a loan and you have poor credit. Those applying for VA loans with poor credit usually get a better interest rate than they would in a traditional loan option.

There are fewer fees involved with VA loans. There are no processing, underwriting, tax service, and closing fees associated with VA home mortgages. This keeps the closing costs way lower than other loan options.

Continue to: Who Qualifies for VA Home Loans?