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.
Final Thoughts
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.
Chuck Holmes
Former Army Major (resigned)
Publisher, Part-Time-Commander.com
Email: mrchuckholmes@gmail.com
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This was a great article to read regarding VA loans! I feel that there are so many good resources out there for veterans and soldiers alike, but nobody really takes the time to tell them what is out there.
Agreed. There are lots of benefits and good to know things. Of course, it helps to be proactive. But soldiers should have classes on these benefits and entitlements every so often, especially to learn about things they might not know much about.
V.A. loans do make so much more sense if you are a veteran or still a member of the Armed Forces. In these difficult times, it is much harder to come up with a hefty down payment, and in most circumstances, the interest rates are a whole lot lower. It always pays to study your options and this is one option that should always be at the top of the list. Great post!
We got a great rate on my loan (3.24%) and we had no down payment and no closing cost. Plus, the experience itself was pretty darn good.
This was a great article to read regarding VA loans! We have been searching for a home the past year and a half but have not had much luck (the housing market hasn’t been that great either, so we haven’t put THAT much effort into it). But at any rate, my husband being a Veteran he obviously is eligible for a VA loan. From what he has told me, these loans are awesome but they expect the home to be in great shape, which is an added bonus – they won’t let you settle on just anything! He also said the inspection of the home is intense in order to obtain a VA loan, but I don’t have any issues with that!
My wife and I are very thankful for my VA Loan. No money down, no closing costs and a 3.24% interest rate. Not bad!
I really enjoy this article because sometime in the future, I really want to own a home for myself. I have always heard of VA loan but never got a chance to actually read the details because I am far from reaching my dream. A few of my friends are using this option and their interest rate is between 2-4%. Compare to many civilians, this advantage will come in handy to many National Guard members who want to have a great civilian home.
My wife and I just used my VA Loan for the first time and we got our house for 3.24% for 30 years with no money down and no money due at closing. So, it’s really a good option to pursue for anyone who has qualified to get a VA Loan.
We got a great deal on a home loan with our VA loan. Had we gone the traditional route, I’m not sure if we would have qualified for a loan.
This article really informed me a great deal about VA loans. Honestly I never even knew there was a VA loan program at all until just now. It’s amazing how many programs the VA has out there to help veterans save money. I’ll be looking more and more into this as a result of your post and for that, I thank you.
Glad I could help, Chad.
I also took advantage of the VA loan program, and like others who have commented here I bought a home in 2003 with zero dollars out of my pocket at closing. (Actually, I got a refund check at the closing because I had prepaid some insurance that got rolled into the mortgage!) One additional advantage of the VA mortgage is the streamline refinance. Subject to a few limitations, you can refinance an existing VA mortgage pretty much automatically and with little documentation. That’s particularly important when interest rates are at an all-time low. Government debt isn’t going anywhere but up, and eventually interest rates will rise (whether the Fed does it or the market forces it), so I’d jump on the opportunity ASAP.
I didn’t know about the refinancing process. Thanks for sharing those tips. My wife and I are very happy with how things went with our VA Loan. We got a 3.24% interest rate for 30 years fixed with no closing cost. It doesn’t get much better than that!
Chuck Holmes
Great article. I feel that there are so many good resources out there for Veterans and Soldiers alike, but nobody really takes the time to tell them what is out there. Glad that this post is up as a resource!
So true, Justin.
I never remember getting even one class about VA Loans during my time in the military. It would definitely make a great NCODP or OPD topic!
Most Soldiers would benefit by learning about the program, even if they weren’t ready to purchase a home yet.
Knowledge is power.
Chuck
My wife and I recently got a VA Loan when we moved to Florida. We went with SunTrust Bank and were very happy with our banking experience. We paid no money at closing and got an interest rate of 3.24% at a fixed rate for 30 years. We were very happy with the VA People and the bank and would recommend a VA Loan to anyone who is eligible for one.
Of course, you still might need to shop around with different banks to find the best deal.
Chuck