If you’re a current or retired member of the U.S. Armed Forces, or if you’re a qualifying dependent or U.S. government employee, you could be entitled to use a VA loan.
So what is a VA loan, and how do you get one?
What is a VA Loan?
The Veterans Administration backs loans from private lenders in order to help service members and some other people qualify for mortgages.
The loans don’t actually come from the VA. They come from private lenders – like banks and credit unions – and they’re guaranteed by the Veterans Administration. What that means is that the VA assures the lender that it will “make good” on some or all of the loan if the borrower defaults.
There are VA loans available to buy, build, repair, retain or adapt homes for personal occupancy.
The VA helps qualified borrowers buy houses at competitive interest rates – even when those borrowers wouldn’t ordinarily qualify for them on their own.
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Benefits of VA Loans
VA loans come with a whole package of benefits. If you qualify for it, a VA loan ensures that:
- You don’t need a down payment at all, as long as the home’s sales price doesn’t exceed its appraised value. That means you can buy a home with nothing down using a VA loan.
- You won’t be required to buy private mortgage insurance, or PMI. Lenders usually require you to buy PMI if you put down less than a 20 percent down payment – but that’s not the case with a VA loan. Even if you put nothing down, you don’t have to pay for PMI because the VA guarantees the loan; they’ll cover the lender’s losses if you default on the payments.
- There’s a cap on how much your lender can charge you for closing costs. The VA limits that amount to ensure that service members, retirees and qualifying dependents don’t have to pay ridiculously large amounts of money at closing.
- The seller can pay your closing costs, which saves you even more money.
- Your lender isn’t allowed to charge you a penalty fee if you pay off your mortgage early. That means you can pay off a 30-year mortgage in 25 years (or sooner) without worrying about the lender hitting you with a bill for the interest it wants you to pay.
- The VA might be able to provide you with some assistance if you have trouble making your payments. This isn’t guaranteed, and it’s judged on a case-by-case basis, but it’s nice to know that the Veterans Administration may be able to help you keep your house if something happens.
You don’t have to be a first-time homebuyer to use a VA loan. You can also reuse the benefit as many times as you’d like – it’s a lifetime benefit. However, if you want to reuse your VA loan, you must satisfy the first one before you open another. That can mean paying off an entire mortgage or selling a home – either way, you can only reuse your VA loan benefit if the original loan is satisfied.
Are You a Veteran Buying a Home in Ellicott City?
If you’re ready to buy a home for sale in Ellicott City, we can help you find the right one.
Call us at 410-465-5822 to tell us what you want from your next home or to schedule a tour in a home you’ve seen online.
Use these links to check out the hottest listings:
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