Are you looking to purchase a home and need to secure a mortgage, but qualify for a VA loan? You may be wondering what this unique home financing product is and how it is different from getting a conventional loan. Here is what you need to know about VA loans.
The Down Payment
One of the biggest advantages of getting a VA loan is that there will be no requirement for a downpayment. While a downpayment is always allowed if you have the cash and want to lower the size of the mortgage that you take out, you don't need to have the cash on hand. This is a huge benefit since it allows people to buy a home that would normally have to wait and save up a big down payment.
In comparison, your conventional FHA loan is going to require a downpayment. The exact percentage that is required is going to vary from lender to lender, with many requiring a bigger down payment during the current pandemic to ensure that you are a qualified buyer. Don't be shocked to see some lenders requiring as much as a 20% down payment to show that you can be trusted to make regular monthly payments.
The Interest Rates
It is very common for VA loans to have a lower and more competitive interest rate when compared to conventional loans. You'll even be able to get those competitive rates without a down payment since conventional loans often require a big 20% down payment to get the best possible rate. This is going to save you a ton of money over the years since you'll have a lower monthly payment and pay less in interest with a VA loan.
The Credit Requirements
Another area where conventional loans have become more strict recently during the pandemic is the credit score requirements. You'll likely find that lenders offering conventional loans are now looking for buyers with better credit scores before approving their mortgage, with more buyers getting denied during the pandemic that would normally be approved. VA loans have a much lower credit requirement, which is designed to help those people serving their country that have not been building up their credit at that time.
VA loans can be a great financial product to use if you qualify for one. When shopping around for a mortgage, be sure to let your potential lender know that you qualify so you can learn about all the unique benefits of having a VA loan.
For more information, contact a VA home loan provider.
Share19 August 2020
After I decided to buy a new home, I realized that I probably needed to prioritize the things on my wish list. Since I am not wealthy, I realized that I probably couldn't get everything that I wanted out of a single home--at least, not this time around. Fortunately, I worked with an incredible real estate agent who helped me to figure out which type of property would pay off in the end. Finding a home took a lot of time, but I am really pleased that I found the right one. This blog is all about learning to prioritize your home hunting wish list so that you can have the home and financial situation of your dreams.
