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Things You Most Likely Never Knew About Your VA Loan
VA loans are one of the ways Americans thank their servicemen for defending our freedoms and
democracy. The loans are extended to military veterans and represent one of the most powerful
lending programs in the market. VA loans are available at flexible rates and ensure support to
eligible veterans in areas where private financing is otherwise not available or easily accessible.
The loan scheme is extremely popular among veterans, however, not all know about the benefits
and perks that the program offers. The blog discusses some of the advantages.
Pre-payment does not invite a penalty
Unlike other loan schemes, VA loans don’t carry a prepayment penalty. You can make extra
payments as and when you desire to avoid accumulated interest over the loan’s life cycle. You
can also ask the provider to deduct a little extra amount of money towards installment payments.
You don’t need to pay mortgage insurance
Mortgage insurance premium is the amount you need to pay every month if you’re not making a
downpayment of at least 20% of the total amount when availing a loan under conventional
programs. The VA program eliminates the need to make any such payments, which helps you
save a substantial amount of money throughout the loan’s life.
VA loans are for particular type of homes only
The VA will offer loans to finance the purchase of properties in “move-in-ready” condition such
as single family homes, condos, and modular housing. If you’re mulling seeking finance for a
property other than the ones mentioned above such as a farmhouse, or a fixed upper, VA loans
are not for you.
You need to pay a mandatory fee to refinance your loan
You need to pay a processing fee when purchasing and refinancing a VA loan (normally 2 percent
of the total loan amount). The fund that the VA collects by charging this fee helps run the
program. The fee can be completely waived-off for those who have sustained service-related
disabilities.
VA loans place limits on co-borrowers
You may need to make a down payment if your wife or a veteran is not your co-borrower and
will live in the home. Very few lenders offer such types of joint loans and you should educate
yourself on the terms and conditions of the contract before getting into an agreement.
Veterans can avail a loan even after declaring bankruptcy
Under the VA loan program, even veterans filing Chapter 7 or Chapter 13 bankruptcy can take
out a loan. For those filing for Chapter 7 bankruptcy, the loans are available two years after the
discharge, whereas those seeking protection under Chapter 13 bankruptcy can be eligible 12
months removed from their filing date. Veterans facing foreclosure on their properties are also
eligible to apply.
Conclusion
The blog enumerated some lesser-known facts about VA loans. If you’re a veteran and mulling
going for a VA loan, ensure that you know the current rates for your location. Just use the
keywords describing your location to Google the prevailing rates. For example, if you’re located
in Texas, the useful search-phrase can be ‘VA loan rates Texas’ or ‘Texas VA home loans’.
Additionally, you need to work on your credit score before filing your application, as a weak credit
rating is the most significant impediment in taking out a VA loan.