A VA loan is a type of mortgage that is backed by the Department of Veterans Affairs, and it is a common type of mortgage people obtain today when purchasing a home. If you want to buy a house and are looking for a good mortgage, choosing a VA loan might be right for you. This is a great option for many people, and it offers key benefits compared to other loan types; however, it might not be the best option for you. You should carefully examine your options before selecting a loan type, and here are several things to examine.
VA loans were created to help veterans buy homes. Because of this, anyone who is currently serving or has ever served in the military is typically eligible for a VA loan. If you served in the military, you should be able to get a VA loan; however, if you were discharged from the military, there are rules that can disqualify people from getting VA loans. The best thing to do is talk to a lender about your personal, unique situation to find out if you are eligible for a VA loan.
A second factor to consider is the amount of money you can afford to use as the down payment on your home. Most loan types require some form of down payment. For example, to qualify for a conventional loan, you will typically need 20% down on the house you are buying. You can get around this requirement by paying a monthly premium, but this can be expensive. With a VA loan, you can qualify without even having a down payment.
If you are eligible for a VA loan and do not have any money to put down when buying a house, a VA loan is probably the best option for you. On the other hand, you might be better off with a different loan type if you have a large amount of money to use as your down payment.
One thing to realize about VA loans is they require a funding fee, which is normally around 2.15%. This percentage is based on the purchase price of the home you buy, and it is a one-time fee. The funding fee can be added to your home loan, and it is paid directly to the Department of Veterans Affairs. Its purpose is to keep this organization funded.
If you do not want to pay this extra fee, you could analyze other types of loan programs to see if there is a better option for you.
The other thing to consider is your current financial situation, including your credit score. The credit score requirements for VA loans are less stringent than those for other loan types, which means you might only qualify for a VA loan if your credit is less than perfect. If you have excellent credit, your options might open up, which means you could look into other types of loans to find one that is best for you.
Keep in mind, the interest rates on VA loans are extremely competitive. You might be able to get a lower interest rate with a VA loan than other loan types, but this varies. The best thing to do is compare your options carefully when shopping for a loan so you can find the type that offers the best terms for your situation.
Getting a VA loan is like getting any other type of loan. If you are ready to buy a house and are considering a VA loan, talk to a lender today to find out if you are eligible.