The VA home mortgage plans are important for veterans and active military officers. It has become more and more difficult for many military borrowers to have a proper credit history and maintain assets necessary for pushing forward the traditional home financing. The VA loan’s advantages over other finances are many, and that is what we are covering in this post. So let us get down to exploring the different benefits that a VA loan offers to military personnel and veterans.
No down payments
From no PMI to zero down payments, a VA loan offers service members and vets the best of financial benefits. Specifically because of no down payments, this loan outclasses other traditional finances such as FHA loans and can even offer sizeable monthly savings.
If we discuss FHA loans, then the minimum down payment is anywhere near 3.5 percent; for conventional financing, the down payment can shoot up to five percent. So for a $250,000 mortgage, the military borrower will need to give nearly $8,700 in cash if she/he goes with a normal FHA loan; this price, however, will exceed up to $12,500 for a more conventional financing option.
These are nearly insurmountable sums for any average military borrower. The fact is that an average VA borrower will have just about $9,000 in the form of total assets. Now the VA loan, which is given to military borrowers, comes at a zero down payment. So, in a way, this loan makes the military officers get a slice of the famous American Dream without giving their years of savings in the form of a hefty down payment.
No monthly mortgage payments
Unlike other conventional loans, a VA financing option does not need the vets to pay for their mortgage insurance every month. For FHA loans, they may get upfront mortgage insurance charges that are need to pay annually. In an FHA loan, the service member’s annual mortgage insurance can be calculated by knowing the amount they have to pay for the same finance every month.
The vets and service members who got a VA loan last year can easily save much more than a huge sum of $40 billion in private mortgage costs. The traditional borrowers who just cannot put down 20 percent will need to pay for a private mortgage insurance plan.
Now, this is just an additional fee that is charged on a monthly basis until the borrower builds powerful 20-percent equity. This cost may vary as per the officer’s loan amount and several other factors. However, it is pretty common to cough up more than nearly $100 every month for PMI.
Relaxed credit needs
The Department of Veterans Affairs manages different loan programs, but the agency does not enforce or set credit score minimums. Nevertheless, many VA lenders establish credit-score benchmarks for judging the probability of a borrower defaulting. The credit score that a vet needs to maintain for securing this loan is nearly 620.
However, while applying for a traditional loan, a vet will need to meet a super-high benchmark. In 2016, the average traditional buyer had to show a score of nearly 50 points higher than what had to be maintained by a VA buyer. So with a VA loan, a vet can have pretty relaxed credit-score needs.
Plus, here is the best part of the deal-apart from having minimum credit requirements, a VA loan is often more forgiving than other finance options when a vet or a military officer suffers from foreclosure, bankruptcy, or short sale. That is, a VA loan is often very flexible for letting a service member meet her/his finance demands.
So here are the best benefits that every vet or military personnel can enjoy by securing a VA loan. This is one of the best finance options that vets or service members can pick for simplifying their home-buying journey. Now, did you like what you just read? If so, then do bookmark this space to read more insightful pieces dedicated to the ever-evolving American mortgage sector. And if you liked this dope on VA loans, then share it with vets or military officers who are in search for a home mortgage in West Palm Beach or elsewhere.