The Benefits of VA Loans Versus Conventional Loans
The VA home loan program was designed to help those that were or currently are a part of the United States military. The program is an effort to welcome the soldier?s home and provide them with an easier type of mortgage. If qualified for this specific loan, you will find that there are many benefits of VA loan closing costs, as well as additional benefits to the entire loan program.
Lower income to debt ratio
Conventional mortgages factor in many things, including a person?s income to debt ratio. This means that they look at how much money the person is making and how much they owe in debt. They look at these things to get a better idea of how much money the lender will have to put towards a mortgage payment. They are often estimated on the lower end, whereas the VA home loan may estimate more on the higher end, giving you more ability to purchase a home of your needs.
Less strict of loan requirements
Conventional mortgages have a lot of requirements, including employment for a minimum of two years, exceptional credit, a specified minimum down payment, and sometimes recommendations from previous landlords. There are even strict requirements regarding where the down payment comes from. The money must have been in the account for a specific amount of time and it cannot be moved from one account to another during the buying process. One of the benefits of VA loan closing costs and the program overall, is that the restrictions are loosened.
In most cases, a VA loan does not require a down payment, does not require steady employment in a new industry, and does not have as strict of requirements about bank accounts. To qualify for a VA loan, one must have served 181 days during peacetime, 90 days during war time, or six years in the Reserves or National Guard. The spouse of a service member who was killed in the line of duty may also qualify.
Reduced mortgage rates
Perhaps one of the biggest benefits of VA loan vs conventional is the reduced mortgage rates. Traditional lenders may have to pay points or even mortgage insurance on their mortgage loan. VA loans do not require mortgage insurance and allow for 100% financing, reducing the need for a down payment. These benefits of VA loan closing costs can be achieved simply by determining your VA home loan eligibility and then purchasing a home with the VA program.
The effect of the program
The effect of the VA loan program has been substantial. The VA Home Loan has helped more than 22 million veterans achieve homeownership. Every day, even more veterans are applying for and then closing on a house of their own with a VA mortgage loan. The benefits of VA loan closing costs have significantly contributed to the success of the program. It has also helped increase enrollment into the U.S. military. When there are many beneficial incentives offered, such as the VA Home Loan Program, more people are willing to sign up and protect our country.
Veterans face everyday challenges that civilians cannot understand. They struggle to find slower paced employment, to expand their educations, and to become homeowners. The U.S. government introduced the VA Home Loan Program in an effort to solve one of those problems. This program offers looser loan requirements to purchase a home. It also offers the option of no down payment, reduced mortgage points, and the ability to forgo mortgage insurance. VA loan requirements can be discussed with your local lender and you will be on your way to purchasing your own house!