Tuesday, April 21, 2015 - Article by: Prospect Financial Group San Deigo, CA - Prospect Financial Group, Inc. -
The VA loan is a very advantageous loan program offered to those tied to the American military. Some factors that make the VA loan one of the best on the market are its 100% financing options, low closing costs, forgiving loan standards, and below-market mortgage rates. VA mortgage rates are on average 0.375% lower than going rates for conventional loans. In addition, VA loans carry no monthly private mortgage insurance (PMI) unlike other low-downpayment loans.
The VA loan has existed for 71 years with the sole purpose of helping servicemen and servicewomen finance their homes. These loans are guaranteed by the Federal government to give incentive to lenders to finance the loans, which is what makes it possible for all the unique features mentioned above. While loan standards tighten across the board, the VA loan has remained forgiving and lenient.
VA loans are backed, but not originated, by the Federal government. Like other mortgages, these loans come from private lenders, so they come with standard fees. VA loans also have the same loan limits as conventional loans. For most of the country, the loan limit is $417,000. However, in higher-cost areas, the limit is higher.
Because no PMI is required, there are funding fees that help the VA continue to back loans. Disabled veterans are exempt from these fees, and all fees vary between borrower and circumstance. For first-time borrowers using the VA loan program, the funding fee is typically 2.15% of the purchase price. The best part about VA funding fees is that they can be added to the overall cost of your loan. That means instead of paying these fees upfront, the fee will be reflected in your monthly mortgage payments.
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