There are a lot of perks available through VA loans if you qualify for one, and most of these perks are financially related. If you were ever in the military or currently are, you will likely qualify for a VA loan, and this is a type of loan you can use to buy a house. If you want to buy a house and would like to consider using a VA loan, here are some of the top financial perks you may experience from choosing this particular type of loan.
You Do Not Need a Large Down Payment
The first financial perk of a VA loan is the down payment requirements. Many people are able to get a VA loan without putting any money down to buy a house. If you do need money down, it will be very little. This is one of the top reasons people turn to VA loans when they qualify for them, as it is very hard for many people to save up enough money to meet the down payment requirements for other loan types.
You Will Not Pay PMI
A second financial perk of a VA loan is that they do not require paying PMI. PMI, or private mortgage insurance, is a requirement for conventional loans when people do not have large enough down payments. PMI is an added expense a borrower must pay for many years, and it can add up to a large amount of money over time.
With a VA loan, you will not pay PMI. However, you will pay a one-time funding fee. This fee is typically 2.15% or less, but it may be slightly higher for some people. If you have money to use for a down payment, this fee might be less than this. There are also situations when the VA will waive this fee; however, you would have to apply to have this fee waived and meet strict criteria.
There Are Limits with Closing Fees
The other financial perk of a VA loan is the limits that are in place in terms of closing costs. When you close on any type of loan, you will encounter closing fees that you must pay. With a VA loan, there are limits, though, and lenders are prohibited from charging certain types of closing fees when issuing VA loans.
All in all, you can likely get a VA loan for less money than other loan types, and you should know that the interest rates on these loans are very competitive. If you would like to apply for one, contact a company like Unity West Lending today.