Article by Philip Georgiades
If you are like most people, you are probably confused about the different types of loan programs. The top 10 reasons a VA loan is a good choice when compared to a conventional or FHA loan are examined below.
1. No Money Down required.
There is no down payment required for a VA loan. The veteran may choose to put down a down payment. However, the down payment is not a requirement for purchase. Many other loans have a down payment of 3.5% (FHA loans) of the purchase price to 20% of the purchase price for conventional loans. Recently, 100% financing was offered for conventional loans but this caused the housing crisis. As of this writing, the Veterans Administration loan program is the only down, 100% financing loan program available.
2. No Closing Costs Option.
There are many closing costs that are required with other loans. Closing costs include Homeowners Insurance, Title Insurance, Inspection Fees, Escrow Fees, Taxes etc. If the buyer structures a VA home loan offer to purchase the ideal way, the closing costs will be paid for by the seller and not the buyer. On average, the closing costs can exceed 3-5% of the purchase price of the home. This can equal thousands of dollars. If you purchase a home using a conventional loan, you may be required to pay ,000 or more for closing costs. With a VA Home Loan, you may not have to pay anything!
3. Non allowable closing costs.
Even if the seller refuses to pay for all of the closing costs (or the buyer chooses to pay), the US Department of Veterans Administration will still limit the fees that the buyer can pay. In a conventional purchase transaction, the buyer may be charged for the following: Doc prep (documentation preparation) fees, conveyance fees, escrow and some attorney fees, photo inspection fees, interest rate lock - in fees, postage and other mailing charges, stationery, telephone calls and other overhead, amortization schedules, and membership or entrance fees, escrow fees or charges, notary fees, prepa! ration a nd assignment of mortgage to other secondary market purchasers, trustee's fees or charges, loan application or processing fees, fees for preparation of truth-in-lending disclosure statement, fees charges by loan brokers, finders or other third parties, and tax service fees. However, with VA home loans, all of these costs are not allowed.
4. VA certificate of reasonable value.
When purchasing a home using a conventional loan or using cash, you will have to rely upon the appraisal as a means to determine the properties worth. The Veteran Administration will issue a certificate of reasonable value. This certificate is good for up to 6 months. In addition to this, the CRV (Certificate of Reasonable Value) is valid for 6 months and good for any VA transaction, not just the one who wrote the contract.
5. VA home inspection.
During the appraisal, the VA inspector will verify that the property meets all Veterans Administration codes. The property must be in habitable condition. The VA protects the buyer from buying a property that is in bad condition. The VA inspector will examine, the roof, the furnace, the plumbing etc. If the property is not up to the VA code, the Veterans Administration will require that repairs are made to the home at no cost to the VA buyer.
6. Streamline Refinance for lower rates.
If you have purchased a home using the VA program, you can choose to refinance when rates are lowered. The streamline process allows you to refinance without a credit check, without most documentation and without an appraisal (in most cases).
7. No prepayment penalty.
Most conventional loans require a prepayment penalty. This means if you refinance or sell the home, the lender may charge you fees for doing so. In many transactions, this cost can exceed ,000 or more.
8. Points Capped.
Most lenders or loan brokers will charge a service fee to originate a loan. These are commonly referred to as points. Loan origination fees can not exceed the limit set b! y the VA . The VA will not allow a lender to charge you above what they feel is reasonable.
9. Assumability.
All VA loans can be assumed by other veterans. Conventional loans are not assumable. The VA will allow you to sell your property and have the new buyer take over your old loan.
10. Low rates.
The Veterans Administration Home Loans usually have very low interest rates. These low rates are in part set by the Federal Reserve. Many conventional loans have adjustable rates that start out at 3% and may exceed 12%. A fixed rate VA Home Loan will never increase. Your payment will remain the same for as long as you own the loan. Your interest rate is locked for up to 30 years.
About the AuthorTo Apply For VA Loan or for more VA home loan info, call 888-554-6846 or visit => VA Home Loan Centers Philip Georgiades is the Chief Loan Streward for VA Home Loan Centers San Diego.
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