Everything you should know about a VA-guaranteed loan
A VA guaranteed loan is created by private investors and lenders such as banks, mortgage companies, and mortgage brokers for eligible veterans. The loans are meant for service member and veterans who are eligible and have a number of loan benefits. They are more appealing and affordable as compared to most conventional loans.
What is the current veteran loan limit?
if you want to purchase a home, the lenders can guarantee you up to about 400,000 dollars of the total loan with military benefits and zero private mortgage insurance. The limit is not constant every year and may vary in different.
If you already bought a home using a normal mortgage, you can refinance your existing mortgage. There are two options, you could refinance the loan and reduce the interest rates through a process known as streamline loan or interest rate reduction refinancing loan or just simply take cash out loan or equity. Through equity, you can get cash out for up to 100% of the value of the home.
What are the benefits of a VA loan?
The biggest benefit about a VA loan is that you will not have to pay a down payment when making a home purchase. This means that it will cost you less to get a mortgage loan. for conventional loans, you will have to pay up to 20% of the cost of the home to get a mortgage.
There is a limit on the closing cost when you make a mortgage payment. The seller is obligated to pay all the buyers closing costs if the purchase is loan related. They may pay up to 4% of the concession cost.
They have a typically lowered interest rate compared to conventional mortgages. Most private lenders and government financing institutions have imposed lower interest rates on military mortgages. This means that the mortgage repayment will be cheaper and easier.
There are fewer penalties imposed on the VA loan. There are no additional charges and prepayment penalties on a military mortgage. You can clear the payments as early as possible without making any additional charges.
What VA cannot do
It will not guarantee that the house you are about to purchase will be free of defects. Whether the home is newly built or has previous owners, the VA will not hire any inspectors to look into the house structure. You are on your own in hiring professionals to seek advice on the purchase of a home. Sellers will give you the opportunity to inspect the home and negotiate on the terms of the repair.
If your VA is for home building, you cannot use it to instruct the builder on construction changes and contract renewal. Your VA will only allow you to suspend the builder form participating in your guaranty programme.
It will not guarantee that you will make a good investment. Don’t expect for the property you buy on VA loan to always appreciate in value. This will only depend on the house and market fluctuations.
Purchasing a home on VA is just like buying a home on a conventional mortgage; ensure you higher professional to help you with the inspection, legal work and choosing the right and most affordable home.