Top 5 Unnoticed Advantages of VA Property Loan.
VA loans are home mortgages given by the federal government through the department of veteran affairs. These loans offer amazing advantages for military home buyers like no down payment, no mortgage insurance, and also flexible credit underwriting.
VA renovation loans allow you to get full financing of the project. If you are purchasing a home or repairing a house, you qualify for a full loan under this program. However, this kind of loans are for those buyers who want to buy a home which is not in good condition, and the seller is not in a position or not willing to do renovations before you buy it.
Anyone who wants to qualify for this loan has to be an active member of the US military, a veteran or a surviving spouse. You can, therefore, see that this loan has restrictions as the property that you want to repair has to undergo thorough scrutiny before you are given the loan. You will also not be allowed to have more than one contractor for the same project.
Here are detailed unnoticed advantages of VA property loans
1. Private mortgage insurance
Other mortgages require borrowers to pay private mortgage insurance if they make less than 20 percent down payment. If you are using a conventional loan, you will have to pay more monthly installment and also pay a 5 percent down payment. VA doesn’t allow lenders to charge mortgage insurance fee on the VA loans. You can now see that using VA renovation loans is more advantageous compared to using other types of loans.
2. Credit qualifications
The only type of loan that will allow the borrower to qualify for loans even with financial problems is the VA. You can be eligible for the loans even if you have been declared bankrupt. VA looks at applicant’s financial circumstances when approving the loans and not his/her credit score. Therefore, those who have had a bad credit record can secure loans to renovate their buildings.
3. Variety of loans
VA offers a different variety of mortgage loans to the borrowers. There are fixed rates which have terms between 15 to 30 years. There is also adjustable-rate VA which can have the initial interest-rate time of up to 5 years with annual rate adjustments after that time elapses.
Though conventional loans can have that, VA loans dictate terms of the loans to prevent abuses. This is very important, especially in the ARM. Here, VA prescribes the rate and limits of the rate adjustments.
4. Features of the loans
VA loans do not have prepayment penalties which conventional loans do have. VA loans are also all assumable loans. This feature allows one to sell a house financed by VA loans which cannot happen with the case of conventional loans as their loans are not assumable. Assumable loans can be transferred to someone who is buying the home. He/she will not be required to take out a new mortgage for the purchase of the house. You can, therefore, see that VA loans are more beneficial than conventional loans.
5. The significance of the loan
Veterans can buy a home using VA loans without the need of making a down payment which you have to pay for in conventional loans. Conventional loans will require you to pay 5 percent down payment in most circumstances. You can, therefore, see that VA loans are more advantageous than conventional loans.
