4 Things All Military Veterans Should Know About Mortgages

 

Thank you for your service! As a benefit to you for serving our country, the U.S. Department of Veterans Affairs and the mortgage industry recognize your dedication and in turn created special programs to purchase or refinance your home. VA loans are designed for military personnel, veterans, and military families. For a full list of eligibility requirements, visit the VA website.

 

There are a variety of VA loan benefits. Let’s talk about a few….

1. 100% financing available

VA mortgages are one of the few ways remaining that you can get a home purchase loan with no

down payment. Because the VA guarantees the loan, the lender doesn't need any cash up front as a

hedge against default.

 

Result: You can finance the entire amount of your home purchase, up to fairly generous limits.

 

2. Avoid PMI (Private Mortgage Insurance)

Conventional mortgages require that borrowers obtain mortgage insurance if they make a down

payment of less than 20% of the home value. This is usually in the form of private mortgage

insurance, or PMI, which can add an additional cost of 0.5 – 1% of the loan amount annually.

Because the VA is already guaranteeing the loan, additional insurance isn’t necessary.

 

Result: Not only can you get a mortgage with no down payment, you can get a mortgage with no

down payment and no mortgage insurance.

 

3. Attractive mortgage rates

Because VA loans are guaranteed, that reduces the risk for lenders. As a result, VA mortgage rates

are competitive with those offered on conventional mortgages, and may be lower than conventional

loans with minimal down payments.

 

Result: A lower mortgage rate means you are putting more money toward the principal of your loan and building equity faster.

 

4. Credit requirements

Borrowers with diminished credit may have an easier time qualifying for a VA loan than for other

types of mortgages. The VA itself does not require a minimum credit score, but lenders will have

their own standards. Some lenders will approve a VA mortgage for borrowers with a FICO credit score as low as 580, though 620-640 is the more common minimum.

 

Result: Many borrowers have to put off the purchase of a home to work on getting their scores up, but you don’t have to wait.

 

Obtaining a VA Mortgage can often be the least expensive way to finance your home if you are eligible. So what better way to celebrate Veteran’s Day than to purchase a home? Get started today.

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