A VA loan offers many advantages over a non-VA loan. It can save you much more money and can it is one of the easiest loans to get approved. Below is a list of many of the advantages veterans should be aware of when looking into the VA loan.
· No Down Payment
This loan does not require a down payment. There are no up-front out-of-pocket expenses with the VA loan.
· Low Interest Rate
VA loans typically have much lower interest rates than non-VA loans. This can significantly lower monthly payments.
· Faster Processing
Borrowers submit an applications and lenders that have VA approval can begin processing. They can finalize the loan without waiting for the VA to review everything, so the loan goes through everything much faster.
· VA Guarantee
The VA provides a guarantee on the loan, which protects the lender if the borrower defaults.
· No Prepayment Penalty
Some loans do not allow you to pay off a balance earlier than the set time without a penalty. This ensures a profit from the loan. Not so with the VA loan. There is no prepayment penalty.
· Cost Limitations/Discounted Fees
The VA loan was designed to lower costs to the borrower. The government actually limits the amount that can be charged in origination fees, closing costs, and appraisal fees on a VA loan. The funding fee may range from .5 to 3.3 percent, and can be paid out-of-pocket or rolled into the loan, (while some are exempt).
· Benefits for Disabled Veterans
If the veteran has any kind of service disability, they have the ability to get their funding fee waived. If the disability is permanent and 100% service connected, they may be able to get a $50,000 grant to have their home modified to accommodate the disability.
· Assumable Mortgage
With a VA loan, the veteran could transfer their loan to someone else. They would assume the loan.
· Loan Flexibility
A VA loan can be used for purchasing a home or buying land and/or to build a new house. It can also be used to refinance or modify a previous loan as well.