When buying a home, you also have to worry about expenses other than the purchase price. Your mortgage lender may also require you to pay a fee to obtain a VA loan. You can get a VA loan without paying a fee, and the fee you pay is not necessarily a fixed cost. You can choose whether or not you want to pay a fee and how much you want to pay, depending on how much extra money you have to work with. You can also choose to make the payment at the beginning of the loan process, the middle of the loan process, or when you close on your home.
To learn more about this, here are the biggest benefits a VA loan can give.
No Down Payment
If you apply for a VA loan, you do not have to pay a down payment. Typically, mortgage lenders won’t lend more than 80 percent of the property’s value, which means you must pay 20 percent of the value to buy the home. The money you pay for the down payment can be considered equity, which means it can be used as a source of capital for a future transaction.
Because you don’t have to pay a down payment, you can save the money you would have paid and use it for other expenses. You can also use the money to pay off other debt or save it in the house’s escrow account.
Flexible Credit Requirements
VA has a flexible credit requirement that is similar to the requirement of other mortgage lenders. However, the VA has a more forgiving policy than other lenders. If you have a credit score of 580, the VA will consider you qualified, even if other lenders won’t. And if you have a credit score of 500-579, you’re considered eligible for a VA loan, although you might have to pay a higher interest rate because of a poor credit history.
No Mortgage Insurance
When you buy a home with other types of loans, you pay a premium that is called mortgage insurance. It is a fee that goes to the lender’s mortgage insurance program. Mortgage insurance pays off your mortgage in case of death or disability.
However, with a VA loan, you won’t have to pay a mortgage insurance premium. If you apply for a VA loan, your lender will automatically deduct mortgage insurance from your mortgage payments. This means that you’re paying for the program, but your lender is giving it to you for free.
Multiple Use of VA loans
VA loans don’t expire. You can use the money you borrow from the VA loan to buy your home, and you can also use it to buy a car, pay for college tuition, or renovate your home. If you use your VA loan to buy a car, you can buy a new car or a used car. You don’t have to buy it from a dealer, though. The loan covers cars that are bought from individuals.
If you get a VA loan for college tuition and you don’t use it for college tuition, you can still use the loan to buy a house. If you have your student loans completely paid off, you can use the VA loan to buy a home. However, if you only have a portion of your debt paid off, you must consult with your lender about the home limit for your loan.
In this article, we’ve covered the benefits that a VA loan can give you. You don’t have to pay a down payment, you don’t have to pay mortgage insurance, and you can use the loan to buy a car, pay for college tuition, or renovate your home. If you’re interested in getting a VA loan, you should contact a local lender for more detailed information about the loan and the other mortgage options available.
Clayson Mortgage offers VA loans in Utah that can help you buy your next home, purchase a car, or pay your college tuition. Let us help you get the best loan you deserve. Contact us today to get started!