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Benefits of a VA Home Mortgage Loan
When it comes to applying for a mortgage loan, there are many different types of programs. With the many different loan programs available, it is important to choose the best program for your particular mortgage needs.
One of the home mortgage programs you can choose from is a VA loan. This type of program is designed for veterans to purchase a primary residence or refinance an existing mortgage loan. Below are the many benefits to the VA home mortgages.
No Down Payment
A VA mortgage offers veteran buyers a program with a zero down payment. This means the loan will equal the sales price or the appraised value of the home. The VA mortgage loan program permits veterans with qualifying income and credit to acquire a home without a down payment towards the sales price of the home. On the other hand, Veterans do need money towards closing costs, which the seller can assist the buyer with.
Seller Concessions
VA loans allow the seller to contribute up to 4% towards the buyers closing costs. This is exceptionally important in helping a veteran purchase a new property and reducing the amount of money needed for closing. For example, if a buyer purchases a property for $100,000 the seller can contribute $4000 towards the buyers closing costs. Seller concessions can pay pre-paid items, title fees, mortgage company fees as well as the VA funding fee. The veteran is not allowed to pay for the termite report, which is generally paid by the seller.
Reduce Rates
For many veterans, VA mortgages offer the most competitive rates. VA mortgage loan rates are not tied to the credit scores the way conventional home mortgage rates are. For example, if a client has a credit score of 660, on a VA loan the rate would be the same if their credit score was 780. However, on a conventional home mortgage, the credit score of 660 compared to a 780 would see an increase in the rate.
Mortgage Insurance
Another big benefit in the VA home mortgage program is there is no Mortgage Insurance. Unlike Conventional mortgage loans and FHA mortgage loans, VA mortgage loans do not charge monthly mortgage insurance. This is an average savings of anywhere between $30 a month to $200 a month, depending on the size of the home loan.
Mortgage Loan Size
VA mortgages do have a set loan limit. To determine the loan limit in your area, contact your mortgage officer. For example, the Dallas - Fort Worth area VA loan limits are $417,000
With many different types of mortgage loans, it is important to understand all your options. For a veteran, VA mortgages are a great way to purchase or refinance a home. It is always important to understand the benefits of each home loan program that you qualify for and to make sure you are getting the best possible mortgage loan. Consult a mortgage professional to see which program is best for you!
David White is a home loan officer for the Texas home loan team at Prospect Mortgage. He specializes in VA home loans and offers several different home loan programs.
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