I thought it would be prudent to discus some of the outstanding benefits of the VA home loan program at the time when the banks in our country are going through an exceptionally difficult time thereby, hindering numerous home buyers from obtaining mortgage financing without perfect credit and a down payment. Currently the VA home loan as I like to say is “the last of the Mohicans” in regards to 100% financing for home purchase and now refinance. In the past few years we’ve seen both conventional loans and FHA loans tighten their credit and down payment requirements. At the time of this article both programs require 3% down as a minimum down payment. FHA will begin to require 3.5% down starting in January 1, 2009. Not only that but each require expensive monthly mortgage insurance premiums to insure the lenders in case of loan default (think of it as foreclosure insurance), with premiums on the rise.
That takes us back to some of the main advantages of the VA home loan.
- The VA mortgage loan is 100% financing with no down payment required.
- As of the middle of 2008 the maximum loan amount is now dependant on the Freddie Mac county specific loan limits. Some high cost counties in California and New York for example can have limits as high as $729,500 with zero down.
- No monthly Mortgage Insurance Premiums. This is a huge benefit and can save veteran’s possibly hundreds of dollars a month depending on loan size and credit score.
- No prepayment penalty.
- Credit flexibility – perfect credit isn’t required but poor credit borrowers will still have obstacles
- Interest rates are competitive with conventional loans
- New – VA refinance cash out rules have just been updated so that homeowners can refinance up to 100% of the value of their home. Previous to this it had been capped at 90%.
There several advantages and really too many to list, but if you are an eligible veteran and thinking of purchasing or refinancing your existing mortgage. You need to at least explore the VA home loan
option before you make your mortgage decision. I suggest you speak with a VA Lender that specializes in VA financing. Many lenders out there may have the ability to close a VA loans but the underwriting guidelines are very confusing and problems can arise with inexperience loan officers.
Josh is one of the top VA loan officer’s in the nation. He has close in excess of $50,000,000 (328 units) in the past 6 years. He currently work for BMS, a subsidiary of 1st national Bank.