All the Incredible Advantages of the VA Loan
VA Loan San Diego is one of the best mortgage options for veterans, active service members, and their spouses who survive them. There are a variety of financial benefits which the VA loan offers that aren't available in other mortgage types. When compared to other credit choices they offer these advantages as one of the primary reasons VA loans San Diego volume has dramatically increased over the past 15 years.
Does a VA loan really worth the expense?
Many thousands of veterans, service personnel and families of the military have been able to benefit from this historical benefit program, which has allowed them to achieve their dream of becoming homeowners. Since the Great Recession, VA loans have seen an increase in use which makes them one of the most popular mortgage alternatives.
Let's look closer at the best benefits of a VA loan.
1. There is no deposit required.
Veterans who are qualified can purchase a home without having to make a down payment. This is by far the most significant advantage of the VA loan. This significant benefit enables military and veterans to purchase homes without saving for years in order to pay the traditional lump-sum payment. You can determine if you are eligible for a VA loan San Diego without any money down.
An FHA loan requires the payment of a 3.5 percent down payment while conventional financing typically requires an average of 5 percent for a down payment. An FHA loan could require $8,700 cash and $12,500 to obtain the traditional loan required for a typical mortgage of $250,000. These are substantial amounts for the typical military borrower.
2. Private mortgage insurance is not available.
PMI is a form of insurance that protects mortgage brokers in a borrower default. Most traditional lenders require applicants to pay monthly private mortgage insurance unless there is a 20% downpayment. This is something many veterans cannot reach. Traditional borrowers will be required to pay this fee monthly until they've reached 20 percent equity in their house. FHA loans require a monthly payment of FHA mortgage insurance.
VA loans are not covered by monthly mortgage insurance, unlike conventional or FHA loans. Veterans who obtained a VA loan in the past year could save billions in mortgage insurance costs during the duration of their loans because of the lack of private mortgage insurance.
3. Competitive Interest Rates
Another way in which one of the ways that the VA loan program saves money for Veterans is that it has the lowest average fixed rates in the market.
According to the statistics of ICE Mortgage Technology, VA loans have had the lowest average 30-year fixed rate that has been available in the past six years. The interest rates for VA loans are typically 0.5 to 1% lower than conventional loans. Veterans are able to save money each month, and throughout the loan's duration, they can enjoy lower interest rates.
4. Credit Requirements have Been Relaxed
The Department of Veterans Affairs does not enforce or impose credit score minimums because it manages the loan program but does not issue loans. Most VA mortgage brokers employ credit score benchmarks in order to determine borrowers' likelihood of default. Though they can be lower than conventional loans, the requirements for credit scores can vary.
Veterans don't need perfect credit to obtain home financing with affordable interest rates. VA loans can be more flexible in getting back on the right track after a foreclosure, bankruptcy, or short sale.
While closing costs and fees are included in every mortgage, however, the VA limits how much Veterans are able to charge. The purchase must include the costs and fees paid by other parties. These steps contribute to the affordability of homeownership for qualified homebuyers.
VA borrowers are able to request sellers cover all loan-related closing costs, and up to 4% in concessions, including the prepaid tax and insurance, paying the balance of judgments and collections, and more.
Dennis Sakofsky C2 Financial Corp
2001 Peridot Court, Carlsbad, CA 92009