VA loans are one of the most popular ways for active duty, veterans, and qualifying surviving family members of soldiers to get a home. VA loans, while not offered by the Department of Veterans Affairs, are backed and fully ensured through this government entity. That insurance makes VA loans safe for lenders and affordable for buyers using the loans to their advantage.
In this post, we’ve put together a few things you should know about VA loans and what to expect if you’re looking that direction.
What You Can Look Forward to in a VA Loan
Some VA loans have their greatest appeal in the fact that there is no down payment required. Unlike traditional loans where 5% is commonly required and up to 20% is required to avoid premium mortgage insurance (PMI), VA loans require zero down! Instead of PMI, there is a one-time financing fee due either upon closing or paid out over the life of the loan. Some VA loans could have a down payment, it just varies with the amount.
Finally, VA loans are just as flexible as traditional loans, multiple options, and many different ways to distribute costs throughout the life of the loan.
Closing Costs
Closing costs are one of those sneaky things most first time home buyers fail to account for when saving for their down payment or cash due at signing. And while closing costs are certainly still something that you’ll pay with a VA loan, you will have some flexibility on how you choose to pay them.
VA loans aren’t immune to appraisals, credit reports, fees associated with loan origination, or taxes to name a few; however, a veteran buyer might not be required to pay commissions, brokerage fees, or buyer broker fees which could save thousands in the end.
Finally, you may have an option to roll your closing costs into the lifetime of your loan via lender credits. In this scenario, your lender pays the closing costs on your behalf upfront in exchange for a possible higher interest rate.
VA Funding Fees
The VA will charge a funding fee for maintaining your loan. The amount of the fee will depend on a variety of factors including loan you take out, your current military status, and how much money you put down on your loan to name a few. The VA funding fees are due at closing or can be rolled into the loan.
VA fees exist to keep VA loans a feasible, financially viable option for veterans, active military members, and their families to continue taking out low-cost loans. Additionally, VA fees help keep the taxpayer burden low lessening how much of these costs are passed through the taxpayers.
Getting Help with Your VA Loan Closing Costs and Funding
Closing costs can really put a damper in your mortgage, even if you finance them for many years to come. There are, however, ways you can get those closing costs covered through grants from non-profit agencies among others which can help qualified veterans pay less over the lifetime of their loan and potentially put more hard earned money down.
The best thing you can do is get in touch with a loan officer from Tidewater Mortgage Services. For over 20 years, Tidewater has helped active military, veterans, their families, and civilians get the money they need for their home purchase. An experienced loan officer can get you pre-qualified for funding the same day you call and help you find programs to help cover additional costs with your home purchase. Call Tidewater Mortgage Services today to learn more!
