10/19/2010 VA mortgages offer veterans a wide variety of benefits. A few of these benefits are listed below.
• No down payment is required. • Access to the lowest mortgage rates. • Minimal closing costs. • No private mortgage insurance. • No early prepayment penalties.
Though a VA home loan is by far the best mortgage option for a veteran, there are negative aspects to consider when pursuing a VA home loan. These disadvantages, while few, are worth noting.
• Funding fee. Borrowers must pay a fee, called a funding fee, when taking out a VA home loan. This fee is often minimal, but it can represent to up 3% of the total mortgage amount. This fee can be reduced or waived if the borrower agree to make a small down payment.
• Sellers don't prefer VA loans. Because the closing costs are minimal to the borrower in a VA loan, the seller must pay for some of the closing operations that are typically covered by the buyer. Sellers must therefore negotiate a different home price when confronted with a buyer pursuing a VA loan, and some sellers don't like this. They see it as an unnecessary hassle.
• Complexity. VA loans are back by the Veteran's Administration, and there are additional steps involved in processing a VA loan application, just as there are with an FHA mortgage. This can add time and confusing to the procedure. If you are a veteran and you're pursuing a VA home loan, be patient and be willing to provide all necessary paperwork.
If you're a veteran and you're ready to make a home purchase, the benefits of a VA mortgage greatly outweigh the disadvantages. But if you're aware of these considerations on the way in, you'll be more equipped to deal with problems when they arise and get your loan funded that much faster.
