Advances or Benefits of a VA Loan
There are several advantages to a Veterans Administration home loan. The most obvious and common benefits of a Veterans Administration home loan are as follows:
1. No down payment is required and 100% financing of the home loan is possible. While in the case of normal fixed-rate mortgages not making at least 20% of the purchase price as down payment result in a compulsory payment of homeowners insurance and property taxes to the lender, VA Loans can be acquired at zero down payment without the addition of any such clauses.
2. There is no compulsory payment of private homeowners mortgage insurance.
3. There are also no penalties associated if you prepay the loan. It is usually the case with normal mortgage is that a lender requires you to pay an additional payment to him equal to the interest of six months or more if the borrower pays off the mortgage earlier than the set tenure. Typically, this penalty is charged if the borrower pays off the mortgage within one to 5 years which usually happens when the borrower decides to refinance the mortgage to a lower rate. However, the borrower may still have to pay a prepayment penalty in the later years of a mortgage.
4. The interest rates offered on a VA loan is usually lower than the interest rate on a regular mortgage.
5. Easier loan qualification process than a conventional home loan.
6. Sellers are often required to pay all or part of the closing costs.
Disadvantages Of a VA Home Loan
VA home loans also have their disadvantages. They are as follows:
1. VA Loans made prior to 1 March 1988 can be resumed with no qualifying of the new buyer. If you wire of such a protein the force the veteran homeowner may be liable for the loan.
2. Veterans Administration had a reputation of delaying and taking longer than the conventional mortgage process to approve the loan. This resulted in hesitancy part of many sellers to work with a borrower who is applying for a VA home loan. However, this scenario has changed in recent times and the working of the Veterans Administration for the purpose of approving home loans has improved although it may still take longer than a conventional mortgage approval.
3. Sellers are also hesitant to work with people applying for VA loan as they are often asked to pay a portion or all of the closing costs.
The website of the Veterans Administration is a good resource for checking detailed information about Veterans Administration homeowners loans. In case you cannot find adequate information or have difficulty resolving your issue you can always contact your local or regional Veterans Administration’s office.