The VA loan is one of the best lending products in the market. Not only are they guaranteed by the VA but they also provide 100% financing. This means that with a VA loan, a borrower does not need to put down any money towards the down payment or closing costs. There is a "funding fee", which is a type of mortgage insurance but it is a one-time only, upfront and can be financed into the loan amount. Considering a VA loan for mortgage financing? Read the following bullet points below!
What types of loans offered by the VA?
- Purchase loans.
- Interest Rate Reduction Refinance Loan (IRRL). A special type of streamline refinance.
- VA cash out refinances.
- Native American Direct Loans. Provide financing for eligible Native American veterans for purchase, construction or improvement of homes in protected Native American land.
What are the advantages of acquiring a VA loan?
- 100% financing for both purchase and refinance.
- IRRL's are streamline rate/term refinances that do not need appraisals
- Best option for eligible borrowers who may have difficulties qualifying for a conventional mortgage
- High loan limits. This varies in some states but the highest loan limit of some VA loans is actually higher than on a conventional loan
- No mortgage insurance required. The funding fee is upfront and rolled into the mortgage
- Funding fee is waived for disabled vets.
- Surviving spouses can qualify for a VA loan.
What are the disadvantages of a VA loan?
- Eligibility is limited to enlisted and veterans.
- The funding fee can be expensive depending on the loan amount. Currently, it is 2.15% of the loan amount.
- VA loans are only for principal residences. No allowed for second homes or investment properties.
- Spouse can be the only co-borrower allowed on a VA loan.
For more questions about the VA loan, or to find out if you qualify, visit me here!
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