VA Loan Benefits

VA Loan Benefits

Veteran Education

VA Loan Rates VA loan rates are the interest rates assigned to loans which are guaranteed by the Department of Veterans Affairs under its Home Loan Guaranty program. The VA Home Loan Guaranty program protects mortgage lenders against loss, which  allows banks to offer reduced rates to borrowers. VA mortgage rates can be 100 basis points (1.00%) or more below rates for comparable conventional home loans, especially for borrowers with less-than-perfect credit.


The VA Loan: Better Than FHA And Conventional Loans? There is a "right program" for every mortgage borrower, but for many, the VA  loan stands apart for its combination of low rates, aggressive underwriting, and  secondary benefits. Backed by the U.S. Department of Veterans Affairs, VA loans are designed to  help active-duty military personnel, veterans and certain other groups become  homeowners at an affordable cost. The VA loan asks for no down payment, requires no mortgage insurance, allows  flexible guidelines for qualification among its many other advantages. Here's an overview of the 10 biggest benefits of a VA home loan.


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1. No Down payment On A VA Loan Most home loan programs require you to make at least a small down payment to  buy a home. The VA home loan is an exception. Rather than paying 5, 10, 20 percent or more of the home's purchase price  upfront in cash, with a VA loan you can finance up to 100 percent of the  purchase price. The VA loan is a true no-money-down opportunity.


2. No Mortgage Insurance For VA Loans Typically, lenders require you to pay for mortgage insurance if you make a down payment that's less than 20 percent. This insurance, which is known as  private mortgage insurance (PMI) for a conventional loan and a mortgage insurance premium (MIP) for an FHA loan, protects the lender in the event that  you default on your loan. VA loans require neither a down payment nor mortgage insurance. That makes this a VA-backed mortgage very affordable upfront and over time.


3. VA Loans Have A Government Guarantee There's a reason why the VA loan comes with such favorable terms. The federal  government guarantees that a portion of the loan will be repaid to the lender  even if you're unable to make monthly payments for whatever reason. This guarantee encourages and enables lenders to offer VA loans with exceptionally attractive terms to borrowers that want them.


4. Your Ability To Shop and Compare VA Loans VA loans are neither originated nor funded by the VA. Furthermore, mortgage  rates for VA loans aren't set by the VA itself. Instead, VA loans are offered by U.S. banks, savings-and-loans institutions, credit unions and mortgage lenders each of which sets its own VA loan rates and fees. This means you can shop around and compare loan offers and still choose the VA loan that works best for your budget.


5. VA Loans Don't Allow A Prepayment Penalty A VA loan won't restrict your right to sell your home if you decide you no  longer want to own it. There’s no prepayment penalty or early-exit fee no matter  within what time frame you decide to sell your home. Furthermore, there are no restrictions regarding a refinance of your VA  loan. You can refinance your existing VA loan into another VA loan via the agency's  Interest Rate Reduction Refinance Loan (IRRRL) program or switch into a non-VA loan at any time.


Call AZ Financial, LLC at 480-787-5777 to get your free quote.


6. VA Loans Come In Many Varieties A VA loan can have a fixed rate or an adjustable rate. It can be used to buy a house, condo, new-built home, manufactured home, duplex or other types of  properties. Or, it can be used to refinance your existing mortgage, make repairs or  improvements to your home, or make your home more energy efficient. The choices are yours. A VA-approved lender can help you decide.


7. It's Easier To Qualify For VA Loans Like all mortgage types, VA loans require specific documentation, an  acceptable credit history and sufficient income to make your monthly payments.  But, as compared to other loan programs, VA loan guidelines tend to be more  flexible. This is made possible because of the VA loan guaranty. The Department of Veterans Affairs genuinely wants to make it easier for you  to buy a home or refinance.


8. VA Loan Closing Costs Are Lower The VA limits the closing costs lenders can charge to VA loan applicants. This is another way that a VA loan can be more affordable than other types of  loans. Money saved can be used for furniture, moving costs, home improvements or  anything else.


9. The VA Offers Funding Fee Flexibility VA loans require a "funding fee", an upfront cost based on your loan amount, your type of eligible service, your down payment size plus other factors. Funding fees don't need to be paid as cash, though. The VA allows it to be  financed with the loan, so nothing is due at closing and not all VA borrowers will pay it. VA funding fees are normally waived  for veterans who receive VA disability compensation and for unmarried surviving spouses of veterans who died in service or as a result of a service-connected  disability.

10. VA Loans Are Assumable Most VA loans are "assumable," which means you can transfer your VA loan to a future home buyer if that person is also VA-eligible. Assumable loans can be a huge benefit when you sell your home especially in a rising mortgage rate environment. If your home loan has today's low rate and market rates rise in the future, the assumption features of your VA become  even more valuable. 

Call AZ Financial, LLC at 480-787-5777 to get your free quote.