If you are living on a tight budget, you need to save as much money as possible. Purchasing a home is one of the biggest expenditures that anyone experiences in life. Therefore, it makes sense to look for mortgage solutions that make property buying less expensive. One such solution is a VA loan.
These loans have been in existence since 1944 when they were introduced to make purchasing a home more affordable for people who were leaving the armed forces. Today, the world is a very different place but these home loans are still a welcome benefit for veterans.
Why apply for a VA loan?
One of the main advantages that comes with applying for a VA loan is that you usually do not have to save for a down payment. This is a valuable benefit if you do not have a lot of spare money and you are already trying to save for retirement. Normally, you would need a down payment of around 20% to purchase a new home, so it’s well worth making an application for a VA loan, if your service record qualifies you to apply.
It’s also important to note that you will normally be able to secure favorable interest rates from lenders. This is because these loans come with guarantees from the Department of Veterans Affairs.
What to think about when applying for a VA loan
If applying for a VA home loan sounds attractive there are some things that you need to think about.
- Your credit rating will be taken into account in the same way as happens when you apply for a regular mortgage, The level of credit rating required varies from lender to lender but normally a credit rating of 162 or higher is required in order for an application to have a chance of being successful.
- You will be asked to supply identification and proof of your earnings in the same way that you would if you were applying for any mortgage.
- Fees apply to VA loans in the same way as they do to other mortgages. Fees for the first time using the VA loan system are normally 2.15% but they can vary dependant on individual circumstances. The good thing about these fees is that they are paid directly to the Department of Veterans Affairs. This helps the scheme to continue so that more people can benefit.
It’s important to be aware of all these factors when you are applying for a home loan from the VA scheme.
In an environment where money is often in short supply, saving for a down payment on a mortgage can seem like an uphill task. For this reason, it’s a good idea to check your VA home loan eligibility. Doing so relieves the pressure of having to save for a down payment. It also means that you can benefit from preferential interest rates which make your regular mortgage payments more.