As we gear up for PCS Season, many military families who are moving to new duty stations are considering buying homes with their VA Loans. Today’s guest blogger is an expert in these types of mortgages and can offer a few words of wisdom to first time – and repeat – home buyers.
The VA Has it All
In an ever-changing mortgage world with more and more regulation, VA eligibility is a cozy micro plush sheet that you can settle down in for a long term investment. In fact, over the last 15 years of lending, I have seen many trends rise and fall like the tides of the ocean and only the stable, affordable programs are still here. Veteran Affairs designed the VA loans to have amazing benefits for the Veteran and their family. These loans have Zero down payment requirements up to $417,000 with higher loan amounts allowed, lower monthly payments compared to Conventional and FHA loans, no mortgage insurance ever and you can use your eligibility more than once. These simple unknown facts speak for themselves and are crucial in the viability of all VA loan programs. These benefits give the programs longevity in the market and are the best way to invest in your family‚Äôs future.¬†
In the economy we are in now where we pay $5.00 for one cup of coffee, it is nice to be able to move into your own home with little or no money down.¬† Most American‚Äôs if not all are feeling the pinch of rising costs on everything and it should be comforting to know you can use your VA benefits to help save money. By using your VA benefits you can buy a home with no money down up to $417,000.00.
I recently completed a purchase for a Veteran where the seller and I were able to pay their closing costs, get all their earnest money back and give a principle reduction of $2000.00. The borrower was amazed to say the least. The family was able to move into their dream home for no money down and walked out of their closing owing $2000.00 less than what they purchased the home for. They used their VA benefits which saved them money and helped them to invest in their future with nothing out of pocket.
Similar to the Zero down benefit, VA loans never require a borrower to pay a monthly mortgage insurance charge. Mortgage insurance is just as it sounds, it is insurance that benefits the lender if a borrower failed to pay and ended up in a foreclosure. The lender would recapture their losses and have their assets protected. This additional cost is transferred to the borrower and has absolutely no benefit to them. Furthermore, this fee is a requirement of all other loan programs and is require to be paid by the borrower in order to obtain the loan. In most cases this can be a rather hefty addition to a loan payment.
Comparing an FHA and VA Loan
Let‚Äôs look at a comparison of an FHA and a VA loan to demonstrate the added cost. If the final loan amount on a purchase of a home was $250,000.00, it was a 30 year loan and the rate was 4%, the FHA and VA payment for principle and interest would be $1,193.54, no difference here. But what FHA charges in addition to the interest rate is a monthly mortgage insurance premium. This additional insurance premium adds an extra $281.25 per month to the total payment. This is $3,375 more per year and a whopping $101,250.00 more over the life of the loan. That is a big benefit and one that is very important when considering costs of loans and how affordable they are.
Using a VA Loan More Than Once
Another benefit that Veterans have when they utilize their eligibility is the ability to use it more than once. There is no limit on the amount of times you can use the Veterans benefit and one could even have several loans on their eligibility at any time. This is very beneficial if the Veteran is transferred to another area and is unable to sell their current home. It helps the Veteran establish themselves in their new community and is extremely valuable for investing as well. If the Veteran rented out their first home, they could purchase a new home and turn their previous home into an investment. This is a very good way for a military family to grow their wealth without any real expense. By renting their home out, every payment received creates a positive cash flow for the Veteran.
With all these benefits anyone can see why VA loans have been a cornerstone of the mortgage market for so long. These loans give Veterans and their family options that are not available to any other segment of the American population. From significantly lower monthly payments, no required down payment and the ability to have several loans, VA loans are hands down the best way to invest in your future.
If you would like to know more about your benefits and options, you may contact Aaron Salladay at A&A Mortgage in Manitou Springs CO. 719-685-1949.