3 Major Differences Between VA Loans and Conventional LoansIf you're a first time home buyer or you're planning to refinance your home for the first time, it can be difficult to determine what mortgage product or home loan option will best meet your needs and position you to build wealth and live comfortably in the future. This decision can become even more confusing if you're a veteran, as the VA home loan program offers many of its own advantages, including benefits that aren't available with conventional loans. You are eligible to apply for and receive a VA home loan if you are a veteran of a branch of the United States Armed Forces. These loans differ from conventional loans in many ways, but the three primary differences are outlined below. No down payment required. Most VA loans don't require a down payment. This is by far the most significant and defining benefit that makes these loans valuable to veterans who qualify. IN today's economy, it can be difficult to store up the cash reserves necessary to make a ten or twenty percent down payment on a home. This is especially true if you're planning to purchase a home large enough to raise a family in, as such homes are often significantly more expensive than others. VA loans are among the last loans that are still available with no down payment requirement. In the wake of the financial crisis, many lenders have placed significant down payment expectations on all borrowers they work with in order to reduce lending risks. VA loans are still zero down loans. Lower credit score requirements. Your credit score won't play as prominent a role in determine your mortgage rate or the loan size you're able to qualify for. Granted, your credit history is still one of the primary factors your lender will look at. With a VA loan, though, your lender won't hold your credit score to the same high standard expected with conventional loans. This is due to the fact that VA loans are guaranteed at least in part by the Department of Veterans Affairs. This makes them less risky to lenders. Streamlined refinancing. Though this won't apply to everyone, if you're a veteran and you own a home, you can apply for a streamlined VA refinance loan. These refinance mortgages can be completed very swiftly and don't require some of the same expenses and fees associated with conventional refinance loans. This gives veterans a competitive advantage when trying to reduce their interest rates or take out cash for home improvements or other expenses. Few refinance options are as beneficial, quick, and easy to complete as the VA streamline refinance. |
|
