First of all, let me start by saying that, as a result of changes to the mortgage industry, typical conventional home loans with $0 down have been pretty much eradicated. VA loans now are pretty much all you’re going to get if you want that $0 down option.
So, with that being said, I am giving a list of 5 reasons to get a VA loan compared to a traditional loan.
Reason 1: As I stated above, traditional home loans with $0 down options have been dissolving, with VA loans being the only ones to offer that option. Most banks generally ask for a 10%-20% down payment on a conventional loan. Because VA loan options are backed by the government, banks do not ask for a down payment. This makes VA loans one of the only options that offer 100% financing.
Reason 2: You will benefit by saving a hefty chunk every month through a VA loan compared to a conventional loan. Another plus with this is that since VA loans are backed by the federal government, banks do not require a PMI (Private Mortgage Insurance), which can cost upwards of a couple to few hundred dollars extra a month. Interest rates are much lower with a VA loan compared to a traditional or conventional loan. This is because banks assume less risk due to the fact that VA loans are government-backed, making it cost less each month when added to the benefit of the exclusion of a PMI.
Reason 3: According to information available on militaryVAloan.com, a VA loan allows the seller to pay all of the closing costs up to 6% of the loan amount. A conventional loan only allows the seller to pay closing costs up to 3% of the loan amount.
Reason 4: Qualification standards are much more lenient with VA loans compared with traditional or conventional loans as well. Even though all qualification standards are different with any loan, a VA loan can be obtained more easily than a conventional loan. Once again, this is due to the fact that a VA loan is backed by the government and banks assume less risk by lending to someone taking out a VA loan rather than a conventional loan. For specific qualifications, you should check with your bank or financial adviser.
Reason 5: There are no prepayment penalties on VA loans unlike some conventional loans. With no prepayment penalties on VA loans, this allows the homeowner to refinance or sell the home at any time without having to pay a penalty.
Even with just these 5 reasons to get a VA loan compared to a traditional loan, it is easy to see why it would be the best decision for a military service member or retired military service member to obtain a VA loan when buying a home rather than a conventional loan. There are more benefits to VA loans as well, and these other benefits can be found with just a little bit of research. Remember, it is always free to ask for more information and quotes.
If you have any questions or comments on this subject of VA loans versus traditional loans, please post them below. Thank you.
About the Author: Lauren is a stay at home mom currently working from home as a freelance writer. She is certified in Education with a background in education, writing, and tutoring to help students develop their educational skills. She comes from a military family and writes articles about education, military life, and personal development.