Rising interest rates on home purchase and home refinance loans have made many homeowners uneasy over the past several months. But this shouldn’t discourage service members from taking advantage of the VA loan guarantee program and all of the benefits that it comes with. Whether you’re an active duty service member, a veteran or the surviving spouse of a veteran you’ll likely be eligible to take advantage of the perks that come with a VA loan.
What Makes VA Loans Unique?
One of the main differences between VA loans and many other types of conventional loans is that the Department of Veterans Affairs insures the loans in case the borrower defaults. It’s fully possible to get a great conventional loan from a mortgage bank that comes with an excellent rate. However, it’s only possible to get some of the best rates that are available by having a good credit score, typically around 720. This is not the same for veteran loans.
Because VA loans are backed by the federal government, they allow banks that disperse home loans to assume less risk. The advantages of this guarantee then get passed on to veterans in the form of great rates and other offers. This means that veterans do not necessarily need excellent credit in order to get a good rate. Conventional loans, by contrast, are not backed by the federal government. In the event that the borrower defaults on the mortgage, the bank assumes more of the risk.
Why You Should Consider a VA Loan
VA loans come with many features that make them ideal for soldiers who are looking to settle down and purchase a home or refinance. Not only do they typically come with lower rates and smaller closing costs, refinancing with a VA loan is much simpler than it otherwise would be with a conventional loan.
4 Reasons Why a VA Loan Would Be Advantageous
- Veterans that became disabled while in the armed forces may qualify to have their funding fee waived.
- Borrowers are often able to refinance in order to take advantage of falling rates without re-qualifying for the program. Homeowners who take advantage of this option will get a VA Streamline Refinance loan.
- VA loans don’t require the borrower to pay a down payment. This can amount to tens of thousands of dollars in potential savings in comparison to convention loans that usually require a around 20% down.
- Borrowers looking for a VA loan won’t get denied purely on their credit history. Instead, the VA takes a look at the veterans credit history for the past 12 months.
No matter what you’re looking for in a home loan, it’s likely that there is a VA loan on offer that will suit your needs. Low closing costs and excellent interest rates that are offered for these loans are helping make the dream of owning a home a reality for millions of veterans. With no down payment options and financing available even for borrowers with low credit, there’s no reason to wait any longer to move into the home that you deserve.
