Things You Most Likely Never Knew About Your VA Loan

VA loans are one of the ways Americans thank their servicemen for defending our freedoms and

democracy. The loans are extended to military veterans and represent one of the most powerful

lending programs in the market. VA loans are available at flexible rates and ensure support to

eligible veterans in areas where private financing is otherwise not available or easily accessible.

The loan scheme is extremely popular among veterans, however, not all know about the benefits

and perks that the program offers. The blog discusses some of the advantages.

Pre-payment does not invite a penalty

Unlike other loan schemes, VA loans don’t carry a prepayment penalty. You can make extra

payments as and when you desire to avoid accumulated interest over the loan’s life cycle. You

can also ask the provider to deduct a little extra amount of money towards installment payments.

You don’t need to pay mortgage insurance

Mortgage insurance premium is the amount you need to pay every month if you’re not making a

downpayment of at least 20% of the total amount when availing a loan under conventional

programs. The VA program eliminates the need to make any such payments, which helps you

save a substantial amount of money throughout the loan’s life.

VA loans are for particular type of homes only

The VA will offer loans to finance the purchase of properties in “move-in-ready” condition such

as single family homes, condos, and modular housing. If you’re mulling seeking finance for a

property other than the ones mentioned above such as a farmhouse, or a fixed upper, VA loans

are not for you.

You need to pay a mandatory fee to refinance your loan

You need to pay a processing fee when purchasing and refinancing a VA loan (normally 2 percent

of the total loan amount). The fund that the VA collects by charging this fee helps run the

program. The fee can be completely waived-off for those who have sustained service-related

disabilities.

VA loans place limits on co-borrowers

You may need to make a down payment if your wife or a veteran is not your co-borrower and

will live in the home. Very few lenders offer such types of joint loans and you should educate

yourself on the terms and conditions of the contract before getting into an agreement.

Veterans can avail a loan even after declaring bankruptcy

Under the VA loan program, even veterans filing Chapter 7 or Chapter 13 bankruptcy can take

out a loan. For those filing for Chapter 7 bankruptcy, the loans are available two years after the

discharge, whereas those seeking protection under Chapter 13 bankruptcy can be eligible 12

months removed from their filing date. Veterans facing foreclosure on their properties are also

eligible to apply.

Conclusion

The blog enumerated some lesser-known facts about VA loans. If you’re a veteran and mulling

going for a VA loan, ensure that you know the current rates for your location. Just use the

keywords describing your location to Google the prevailing rates. For example, if you’re located

in Texas, the useful search-phrase can be ‘VA loan rates Texas’ or ‘Texas VA home loans’.

Additionally, you need to work on your credit score before filing your application, as a weak credit

rating is the most significant impediment in taking out a VA loan.