The Basics of VA Loans

VA loans provide an affordable alternative to those who qualify. The VA home loan program offers easy access to financing and unlike almost every other available loan program, there is no down payment required of the borrower. In addition to this, VA loans provide many other advantages as well.

VA loans are dispersed to veterans who meet certain requirements, currently active service members, some reservists, spouses of military service members who have died as a result of serivice and
members of the Public Health Service.

For example, VA loans ensure that you'll be receiving the best deal possible on your new home. This is because before a VA loan approval, the property must be inspected and approved by a VA approved appraiser. This ensures that the home you invest in is not only a comfortable and safe environment for service members and their families, but also that you won't get ripped off on the true value of the home.

Another important plus of the VA loans is that you can request that the seller pay for some or all of the closing costs involved in the purchase of the home. Closing costs are miscellaneous fees charged by different corporate and federal entities that contributed to the overall purchase of your home. These entities include the lender, the title company, the surveyor, the local government offices, first mortgage payment and more. The amount of the closing costs varies depending on the price of the house, but could fall anywhere between 1 to 6 percent of the price of the home. Generally, these costs fall more within the 2-3% range, but it can still become a major dent in your bank account that can be avoided through utilizing VA loans. In fact you can request that the seller pay up to 6% for the buyers costs and fees. If the buyers agent can negotiate this, the buyer should not have to pay any closing costs.

Another important pro of VA home loans is that the loan is guaranteed against lender's loss. Lender's loss is when a third-party is invited into the loan process in order to ensure that the lending company will receive their money back in the event that a buyer defaults on the loan. If you're worried about a less than ideal credit score, that might be another reason why you should choose VA loans over competitors. VA loans have no cut-off on a credit score, so you don't have to stress about not being able to get the home of your dreams because you have not-so-good or even bad credit.

Choosing to take out a VA loan means you also don't have to worry about a prepayment penalty. Prepayment penalties are provisions of your contract with the lender that requires a penalty payment even after your loan is entirely paid off. These are usually from a build-up of interest or expressed as percentages of the outstanding balance when the repayment takes place. Another feature of VA loans is that they have a fixed interest rate that is not adjustable. This is generally a good thing, since the interest rate usually starts off low and you won't have to stress about making interest payments you didn't plan on making.

Overall, commiting to a VA loan is one of the best financial decisions you can make for you and your family. You can see for yourself by comparing the advantages of these loans to other loans and you'll soon see that the VA loan is in fact the best way to buy a home.


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To get a VA loan, fill out the VA loan application here.
Article written by S Zemen of San Diego VA loans.