Benefits and Perks of VA Home Loans
VA Home Purchase Loans
Millions of veterans and service personnel are eligible for a VA home loan. Even though many veterans have already used their loan benefits, it may be possible for them to buy homes again with VA financing using remaining or restored loan entitlement.
Before arranging for a new mortgage to finance a home purchase, veterans should consider some of the advantages of VA home loans:
- No down payment is required in most cases. Conventional loans typically require a 5 percent down payment, and FHA loans require 3.5 percent.
- No monthly mortgage insurance premium to pay. FHA loans come with both an upfront and an annual mortgage insurance charge. Conventional buyers typically need to pay for private mortgage insurance unless they’re making a down payment of 20 percent or more.
- Limitation on buyer's closing costs. Sellers can pay all of a buyer’s loan-related closing costs and up to 4 percent in concessions.
- Lower average interest rates than other loan types. VA loans continue to have the lowest average interest rates of all loan types.
- No prepayment penalties. VA buyers can pay off a loan early without any financial penalties.
- An assumable mortgage, typically subject to VA and/or lender approval. You may be able to have someone take over your mortgage payment, which can be a big benefit in an environment of rising interest rates.
- Foreclosure avoidance advocacy from the VA loan program. The VA has staff members who advocate on behalf of homeowners to find alternatives to foreclosure.
What VA Cannot Do
Guarantee that the house you buy, whether it is new or previously occupied, will be free of defects. The VA appraisal is not intended to be an "inspection" of the property. If you have any doubts about the condition of the house, it is in your best interest to seek expert advice before you legally commit yourself in a purchase agreement.
Most sellers will permit you, at your expense, to arrange for an inspection by a qualified residential inspection service and negotiate with you concerning repairs to be included in the purchase agreement. Such action can prevent later problems, disagreements and disappointments. Remember, VA guarantees only the loan, not the condition of the property. It is your responsibility to be an informed buyer and assure yourself that what you are buying is satisfactory to you in all respects.
VA cannot guarantee that you are making a good investment, or that you can resell the house at the price you paid. VA does not have authority to provide you with legal services.