A simple Guide to VA Home Loans
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VA Home loans are mortgages fronted by the Department of Veteran Affairs. Offered through private lenders, the loan allows for financing without a down payment.
Types of VA Home Loans
There are several types of VA home loans to choose from, depending on your financial needs. These include:
VA Purchase Loans
The VA Purchase loan is one of the most popular VA loans. It comes with favorable terms like zero down payment and competitive interest rates.
Interest Rate Reduction Refinance Loans (IRRRL)
If you are looking to obtain lower interest rates for an existing loan, consider refinancing using the IRRRL. The loan is easy to get as you don’t any appraisals or income documentation.
VA Cash-Out Refinance Loans
VA Cash-out allows you 100% home equity to sort out other pressing needs. This is one of the hugest financial options provided by any financial institution.
Renovation and Home Improvement Loans
This is one of the latest improvements to the VA home loan portfolio. It allows you to borrow up to 100% the amount to improve or renovate your already occupied residential home.
How VA Home Loans Work
VA provides for terms and qualification conditions before you can apply. Some of the eligible people include; active military, those who served for 90 consecutive days during wartime, and 180 days for peacetime. The spouse to a service member injured or incarcerated in the line of duty also qualifies for VA loans.
To obtain the loan, one must provide a certificate of eligibility and other income information to determine the right amount.
Benefits of VA Home Loans
Many people are taking up the loan due to the several VA loan home benefits as compared to regular mortgages.
The main benefits of VA loans over the other regular loans are:
- Unlike most conventional loans, VA loans allow you up to 100% financing without a down payment.
- All the other lenders require those who make less than 20% down payment to have private mortgage insurance. The insurances help protect in case of default. This is different from VA loans, which do not require insurance.
- The main reason which makes the VA Loan favorable is government guarantees partial repayment even when you default.
- As discussed earlier, there are several types of VA loans. Whether you are looking to purchase a residential home or renovations, there are corresponding loans.
- VA loans even though still needs you to have a credible credit history and income details, it allows for flexibility and ease of eligibility.
- VA loans come with ease of operations and flexibility. Unlike other conventional loans that charge for early exit or change of ownership, the VA loan is quite accommodating. It even allows for the refinancing of an existing loan with lower interest rates terms.
VA Home loan is the best real estate financing plan for all qualifying veterans. Even though it comes with flexible terms, remember to treat it like any other loan. Make repayments on time and keep a good credit score.