What are the Benefits of VA Loans?

Many are familiar with the strategically conceived loan programme for veterans, military personnel, and their spouses that have increased the number of homes acquired by the country’s brave servicemen. The VA loan programme has surely been the most effective plan tackling the scourge of homeless veterans in the society. The government initiated and private executed programme supplies home loans to military personnel and spouses of deceased patriots at very low interest rates significantly improving their chances of acquiring their dream homes.

The benefits of the VA loan program cannot be overstated because they are not only vast, but also have flexible conditions attached to them.

No down payment

The most striking benefit of the VA loan program is the absence of down payments that are common features in most other home loan packages. Once a veteran or military personnel is qualified to access a VA loan, he or she can finance 100 percent of the home’s value without putting a down payment. This particularly assists veterans or military personnel struggling with health conditions or other issues that may hinder saving for a down payment.

No private mortgage insurance

Other mortgage loan programs require the borrower to pay a monthly private mortgage insurance unless of course they are able to put together 20% of the home’s value has down payment. This ‘PMI’ is meant to insure or protect the lender in case of a borrower default. This is a very herculean condition for veterans and servicemen to meet; fortunately for them, with VA loans, private mortgage insurance is not included in the terms and conditions of the program. The absence of PMI is due to the unrelenting backing of the VA loan program by the government, who assumes the risks that would have been placed on the veterans.

Low interest rates

Despite its no down payment policy, VA loans still possess one of the most competitive interest rates in the mortgage market. This is because the loans are backed by the Veterans Affair Commission with an immovable guarantee that allows the lending institution to lower interest rates by 0.5 or 1 of conventional loans. Coupled with the absence of monthly PMI payments, VA loans ensure that military personnel are able to save up their income to complete the repayment of the debts.

No pre-payment penalty

With several other loan programs, penalties are attached to the swift payments of loans. These penalties are meant to ensure that the lending institutions make back some of the profits they would have received had the home loans been left to fully mature. VA loans, however, do not have any such penalty put in place for qualified applicants, thus ensuring that the repayment of the home loan is hitch free.