5 Things Most People Don’t Know About VA Loans

If you’re military and in the market to buy a new home, you’ve most likely heard of VA loans. These loans offer the best possible mortgage option for those who qualify. 

Backed by the U.S. Department of Veterans Affairs, VA loans are designed to help active–duty military personnel, veterans and certain other groups become homeowners at an affordable cost.

So, how do VA loans actually work?

Here are 5 things most people don’t know about VA loans.

No Mortgage Insurance Or Down Payment

Compared to other mortgage programs like FHA and conventional loans which require at least 3.5 percent to five percent down, VA loans allow you to buy immediately without having to save for a down payment.

With a VA loan, you also avoid steep mortgage insurance fees. At 5 percent down, private mortgage insurance (PMI) costs $150 per month on a $250,000 home, according to PMI provider MGIC. Using a VA loan saves you money upfront, and increases your buying power.

Once Eligible, Always Eligible 

If you qualify for a VA loan, that benefit never goes away! Eligibility is based on the length of time served, and the period in which you served. 

To check your eligibility you’ll need a DD Form 214. Once you have that, a VA-approved lender like ourselves, can request your VA Certificate of Eligibility for you, or you can request it directly from VA’s eBenefits website. 

You may be eligible to buy a home using a VA home loan, even if you served long ago, and once you have this benefit, you can use it as many times as you want. For example, if you have already purchased a home with a VA loan, but have outgrown it and need something bigger, when you sell the home and pay off the VA loan completely, you can re-use your benefit to buy another home. Your entitlement is restored in full.

In addition, some eligible Veterans and Servicepersons can receive a one-time restoration when they pay off the VA loan, and keep the home. This scenario comes into play if you purchased the home long ago, and have paid off the loan. You would then be able to enjoy the benefits of VA home buying one more time.Rates Are Lower With Va Loans

Another benefit of qualifying for a VA loan is that rates are typically about 0.25% lower than those of conventional loans. The VA backs the mortgages, making them a lower risk for lenders. Those savings are passed on to Veterans.

No Prepayment Penalties

If you need to sell your property in the middle of your loan term a VA loan won’t restrict your right to do so. There’s also no prepayment penalty or early–exit fee no matter within what time frame you decide to sell your home.

You can also choose to refinance your existing VA loan into another VA loan via the agency’s Interest Rate Reduction Refinance Loan (IRRRL) program, or switch into a non–VA loan at any time.

Surviving Spouses May Be Eligible

A surviving spouse can purchase a home with their fallen partner’s VA benefit. Unmarried husbands and wives of Servicepersons who were killed in action can buy a home with zero downpayments and no mortgage insurance. Plus, the VA funding fee is waived.

There’s no way to truly repay the spouse of a fallen hero, but this benefit can help move forward after a tragedy. 

Learn More About VA Loans

In addition to these benefits, we also want to mention that VA loans limit the closing costs lenders can charge to VA loan applicants. The money saved on closing costs can be used to help fund your upcoming move in home improvements, furniture purchases or other moving expenses just to name a few.

You can learn more about VA home loans here or get in touch with us today so we can begin working together and finding your home in El Paso, Texas. We are here to help serve you!