5 Things Veterans Don’t Know About VA Home Loans
The US VA loan was established at the end of World War II in an effort to support returning veterans in purchasing a home and building a life after serving their country. A VA loan is a mortgage product made available to current and retired service members as well as their surviving spouses through the US Department of Veteran Affairs.
- Get a home with NO down payment.
With most other loan products, this is entirely unheard of. When buying a home, saving a deposit is one of the most significant barriers to entering the market. VA loans eliminate this barrier for service members and make purchasing a home accessible.
- NO mortgage insurance (aka PMI).
You may have heard of loan products with incredibly low-down-payment requirements (as low as 3%), but these are accompanied by mortgage insurance payments that can easily be over $100 a month, often much more. Even though VA loans offer 100% financing, they don’t require mortgage insurance, which helps keep monthly payments low.
- Use more than once.
Buyers often think that they can only use a VA loan once in their life, and that simply is not the case. VA loans can be used over and over, so long as the buyer only carries one active VA loan in their real estate portfolio. This makes it possible for service members to use VA loans to buy a property and build long-term wealth through real estate with no cash investment.
- VA loans are a life-long benefit.
Many service members erroneously think they can only access a VA loan while in active service or listed with the reserves. However, VA loans benefits are life-long and can be accessed even if you have been retired for 20 years. Before going down the road of applying for a VA loan, check your eligibility and obtain your DD Form 214 from the VA’s eBenefits website. You could very likely be eligible to buy a home using a VA loan, even if it’s been many years since you were in active service.
- You’ll get lower interest rates.
VA loan interest rates always surprise borrowers because they think getting a 100% financed loan would mean they also have to pay higher interest rates. While this is sound thinking, VA loans usually have lower interest rates than other mainstream loan products. In today’s market, VA loan rates are about 0.25% lower than conventional (Freddie Mac and Fannie Mae conforming) loans. Lower rates are possible because the VA backs these loans, making them a lower-risk investment for lenders.
Surprisingly, VA loans have some of the lowest foreclosure rates in the country. This statistic further gives lenders confidence in the product and borrower demographic.
VA loans are not hard to obtain and are made available through local lenders. Current and retired service members can work with a local mortgage broker or bank and do not have to worry about working with a government agency.
If you’re looking to purchase a property and think you are eligible for a VA loan, that’s fantastic! Reach out to a member of our team so we can help you assess your eligibility.