Are you a service member or veteran and would like to become a homeowner? If so, the VA home loan program may help you reach that goal. Requirements for the program are current service in the military, National Guard or reserves, or you have been honorably discharged. You can also qualify if you are the spouse of a service member who has died in the line of duty. If you are eligible for this program it offers many great benefits over a conventional mortgage. Here are some of the differences:
No down payment is required
A great benefit of using the VA home loan program is that there is no requirement for a down payment. On the other hand, a conventional home loan will require a down payment of anywhere from 3 percent to 20 percent of the purchase price. On a $250,000 dollar home, this equals $7500 to as much as $50,000 that will not need to come out of your pocket upfront. This can help you reach your homeownership goals a lot quicker because you won't need to save up as much money. Keep in mind, you will still need to pay some closing costs and may incur expenses such as home inspection and moving expenses.
Private mortgage insurance is not required
With a conventional mortgage, you will be required to pay private mortgage insurance if you do not put 20 percent down. That mortgage insurance payment will be added to your monthly payment until you reach 20 percent equity in the home. Private mortgage insurance payments can range from 0.55 percent to 2.25 percent of the purchase price of the home. As you can see, using the VA home loan benefit can save you a lot of money every month and make your monthly payments more affordable.
Lower interest rates are available with a VA home loan
The VA home loan program is backed by the US Department of Veterans affairs. This means that they are guaranteeing the loan and will pay the lender if you default. This gives many lenders the confidence to extend lower interest rates to borrowers who may not have perfect credit. For those with good credit, you can currently get a great interest rate for VA loans. Typically, a VA loan interest rate will be .50 percent to 1 percent less than a conventional loan. This has the potential to save you a significant amount of money over the life of the loan.
