Home ownership is a huge investment, and also a key element in the American Dream. Since the introduction of the GI Bill, signed into law by President Roosevelt in 1944, the US Government has made home ownership a realistic possibility for the men and women of the Armed Forces, the people who have invested so much in protecting the American way of life. A VA loan provides some great advantages for buyers, compared to conventional loans and FHA options.
The Price Is Right
This is going to sound too good to be true, but it isn’t. Eligible buyers can purchase a home with a VA loan and zero money down. A conventional loan can be acquired with as little as 5% down. FHA loans, another government assistance program that promotes home ownership, can be secured at 3.5%. VA loans blow those options out of the water.
The Price is Right (Part Two)
VA Loans also eliminate the cost of mortgage insurance, also known as PMI. FHA loans require buyers to pay for mortgage insurance twice, with an upfront fee in addition to the annual cost. Purchasing a home with a conventional loan will also require mortgage insurance, unless you have enough cash to make a down payment of 20% or more. VA loans are more accessible and more affordable than their counterparts.
Did We Mention the Price?
VA loans consistently have the lowest interest rate, when compared to conventional or FHA loans. A 2017 study by Ellie Mae showed an average interest rate that was .33% lower than conventional options.
Your financial situation improves, and you’re suddenly flush with cash. It’s time to pay off your debts and stop being hit with savings-draining interest payments. VA loans can be paid off early without the risk of penalty. The same cannot be said about conventional and FHA loans.
And while VA loans undoubtedly offer the best rates, that’s not to say rates can’t improve. Eligible veterans and active duty service members can refinance their VA loans when interest rates dip. This refinancing is also available to eligible buyers who initially financed with a non-VA loan.
All VA loans are serviced by conventional lenders. Eligibility requirements exist based on duty and discharge status (active, reserve, etc.). VA loans may also be available for dependents who lose a spouse in combat. This is an incredible program that brings the American Dream to Americans who deserve it most. If you are VA Loan eligible and looking to purchase a home, Jessica & Sarah are the experienced Iowa realtors who can find the perfect home to fit your budget. Contact us today!