Once again a Veterans loan offers option where they would not exist with a conventional loan.

Because the VA does not have minimum credit requirements, and offers up a 25% guarantee on veterans loans, lenders are more willing to on a borrower who doesn’t meet their ideal credit profile. Meaning if you have less than perfect credit you are likely to get a lower rate with a Veterans loan than with a conventional loan.

Most people don’t realize that a Veterans loan can be passed from one eligible party to another. A Veterans loan is assumable.

This helps in a few ways. First a home that is under a Veterans loan can be passed down to subsequent generations. This is a great thing for many service men and women who’s parents also served faithfully in the armed forces. Second, a great interest rate can be preserved.  For example If the Veterans loan was taken out during a period of very low rates, a subsequent buyer can assume the payments at the much lower rate (provided they are eligible for a Veterans loan).

There is no prepayment penalty on a Veterans loan, meaning that you can refinance or sell your home at any time without having to pay a penalty.

Because a Veterans loan has no prepayment penalty, borrowers have greater flexibility when they need it, not when the lender says they can have it. This is very important for active duty military families who move with regular frequency.

During the qualification process they lender assesses your ability to repay the veterans loan.

The debt ratio is used to evaluate the amount of payment responsibilities that you have outside of your housing costs. For most conventional loans you must have a debt ratio below 36%. Perhaps one of the more overlooked aspects of a Veterans loan is that they allow borrowers to have a higher debt ratio than conventional loans. Your debt ratio is a crucial factor in the loan qualification decision. On account of the guarantee offered by the VA, It will be easier to qualify for a Veterans loan if your debt ratio exceeds the standard 36%.

Conventional loans only allow the seller to pay your closing cost up to 3% of the loan amount.

With a Veterans loan the seller is allowed to pay all of your closing cost up to 6% of the loan amount. And because with a Veterans loan borrowers have the ability to finance out to 100%, in some cases a home can be purchased with zero out of pocket expenses. Imagine not being responsible for paying thousands of dollars at the closing table to move into your new home. With a Veterans loan you can!

Should rates improve significantly with a veterans loan you have the option to do a streamline refinance of the Veterans loan with no cash out of pocket at closing.

Once you have a Veterans loan you can use a streamline program to refinance to a lower interest rate and save on the monthly payments. Currently a Veterans loan is the only type of loan that allows you to drop your interest rate without having to go through an appraisal.

With tough economic time people make do with less.

With a “cash-out” refinance of the Veterans loan those who might not be eligible for a traditional home improvement loan, now can make those long needed home improvements. If you have equity in your home you can do a “cash-out” refinance of your Veterans loan and take out equity (up to 90% in most cases) to consolidate debts and make improvements to the home. This is a great option for a borrower who has lots of equity in their home, but may not have perfect credit, but has the income to justify the new mortgage.

As with all types of mortgage a veterans loan can be either a fixed rate or adjustable (called a VA Hybrid ARM).

With the flexibility afforded with a Veterans loan borrowers are better able to choose the program that is right for them. Perhaps you are buying your dream home. A low fixed rate for either 15 or 30 years is the answer for you. Maybe your duty station requires a 5 year stay. A 5/1 Hybrid ARM suits your situation perfectly. Should you be planning to move from your home in 3 years a 3/1 Hybrid ARM is the solution. Whatever the situation a Veterans loan has flexible options to suit the needs of today’s eligible veterans.

With interest rates currently at all time lows there has never been a better time to get your Veterans loan.

Interest rates on a Veterans loan follow very closely with their conventional cousins and in some cases can be found even lower. Rates change daily so consulting a loan specialist is in your best interest.