A VA loan is a type of mortgage that is available to military personnel and their families. These loans are offered at lower rates than other loans; this is why they are the best loan type for veterans as per mortgage brokers in MA.
It can be a challenge for military personnel to build good credit and other assets needed to get a conventional mortgage. This reason is why VA loans are a breath of fresh air for active and retired military personnel. With that being said, VA loans have many additional benefits to offer that most military individuals don’t know.
To help any active military and veterans wondering what benefits they can avail by getting a VA loan, here are some key benefits:
Here in NH, VA loans offer the lowest mortgage rates
One of the significant benefits of VA loans is that in NH, or anywhere in the US, these loans offer the lowest mortgage interest rates. That is because the Department of Veteran Affairs backs the VA mortgage.
On average, you can get a VA mortgage at a rate that is at least 1 percent lower than regular loan rates. When lenders are giving out a VA loan, they are at lower risk since VA guarantees coverage to the lenders if the borrower defaults. While some might find the 1 percent lower interest rate not a big deal;
however, when you are talking about a loan that amounts to hundreds of thousands of dollars, the one percent lower interest rate amounts to a significant saving.
No mortgage insurance is required for VA loans
When you compare mortgage loans through a loan calculator or a broker such as NextGen Mortgage, you will notice that each conventional loan has mortgage insurance. Mortgage insurance makes up for a significant portion of traditional loans’ costs; however, that is not the case with VA loans.
For example, if you get a conventional loan of $200,000, you may end up paying up to $40,000 in mortgage insurance. While VA loans may come with a funding fee, this funding fee is also waived off if the borrowers have a service-related disability.
Easier credit score requirements
As mentioned above, the credit score is usually a significant hurdle for veterans to take a conventional loan. While credit score requirements have become looser over time, it is still not easy for military personnel to build a decent credit score.
On the other hand, VA lenders usually offer the VA loan to military individuals with a credit score of 620 or above. To put this in perspective, a credit score of 620 is below what is considered good if you want to get a conventional loan.
Limited closing cost
While every type of mortgage, including VA loans, comes with some closing costs, VA loans limit how many closing expenses you will have to incur. Since VA loans require other parties, such as the home seller, to cover some closing fees, the burden of closing costs is shifted away from the borrower.
As long as you are qualified for a VA loan, you can expect to buy a home at a very affordable cost, thanks to the relaxed closing costs. Closing costs consist of many smaller expenses such as taxes, insurance, legal fee, and more. However, whether the seller agrees to bear the closing costs is a different story; this is why it is good to look online for a mortgage broker near me to help you through the process.
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