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Shannon Greenberg

Benefits of a VA loan

Friday, July 14, 2017 - Article by: Shannon Greenberg - Prospect Home Finance - Message

After World War II, the Department of Veteran Affairs created the VA loan to help veterans buy a house. Since then, the VA loan has grown to be one of the best loan options for prospective homeowners. Military, veterans, reservists, and Nation Guard members have the opportunity to qualify for this unique loan. The people who risked their lives for our country are more capable to own a home thanks to the benefits of a VA loan.

No down payments

VA loans do not require a down payment, however, those who are able to put money down are rewarded with lower funding fees. An upfront payment of 5% will lower funding fees from 2.5% to 1.5% of the loan amount. This allows qualified borrowers who are comfortable with the down payment have added benefits while no penalties are given to the people who are not able to put money down.

Low interest rates

The average rate varies per credit score, however, it is constantly lower than the average FHA rate. In most conventional loans, there are monthly insurance premiums that are added on top of interest rates which are not found in a VA loan. The Department of Veteran Affairs back up the loans without additional premiums.

No pre-payment penaltiesIf a borrower can pay off a loan before the agreed end date, there are no penalties in doing so. The VA loan officer will allow the borrower to pay the remaining amount in full without any additional fees. Conventional loans have fees in place to prevent borrowers from paying off a loan early.

Foreclose avoidance

A borrower won't automatically have their home foreclosed due to an unforeseen finical crisis. The VA staff will fight on the borrowers' behalf to find different options to avoid foreclose. The main goal of a VA loan is to ensure that current and retired military personnel can keep the home they worked hard to own.

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