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Veterans of our country’s armed forces and their families deserve recognition and repayment for all the sacrifices they’ve made, and the mortgage industry has long been at the forefront of this effort within the big business sphere. The VA loan program is not only a consideration for veterans and families, but an official, government-backed program meant to help veterans who might otherwise struggle to receive financing for the home they deserve.
At Primary Residential Mortgage, we have years of experience as a VA lender, providing our clients with the access they need to funds to get their situation moving forward. What exactly makes VA loans so beneficial for veterans and families of veterans?
No Down Payment
Because it can be difficult for active service members and officers who move around so often to build credit and save up large chunks of money, VA loans eliminate one of the toughest elements many people face in a mortgage situation. Qualified borrowers can finance their home without putting a single dollar down in advance, a situation that’s virtually unparalleled within the mortgage world.
For loans the mid-to-high six figures, this can result in savings of anywhere from $30,000 to $75,000 over the entire term of the loan.
Better Interest Rates
Mortgage interest rates are all calculated based on the lender’s assumed risk – the larger the risk, the larger the interest rate.
Because VA loans are backed by the government and guaranteed to the lender, though, a big chunk of this risk is eliminated. Interest rates for VA loans will generally be anywhere from 0.5 percent to 1 percent lower than the same loan would be otherwise. Again, the savings here over the full term of a loan can be in the mid-to-high five figures.
No Private Insurance
In most standard mortgages, people who aren’t able to reach a certain threshold of money put down up front – usually 20 percent – are required to pay private mortgage insurance to protect against the chances of a default.
That’s not the case with VA loans because, once again, they’re backed by the government, which guarantees the loan. Veterans can save hundreds of dollars a month and build equity in their homes.
Basic Allowance for Housing
Basic Allowance for Housing, or BAH, is a benefit specifically for active military members. Effectively, it’s money that’s attached to military pay grade, and can be counted as income used to pay off mortgage costs.
No Pre-Pay Penalty
In most normal mortgage situations, if you want to pay off your loan before it matures, you’ll have to pay a penalty – lenders don’t want the loan finished before any interest begins to kick in, after all, and they need a way to still make some of those profits.
Again, this won’t be the case for VA loans. If a veteran has the money to pay off his or her loan before it matures, they can go right ahead with no penalty. This allows veterans to consider future purchases or even refinancing options in ways that many others couldn’t.
Primary Residential Mortgage is a premier VA lender with years of experience serving veterans and their families. Our friendly staff is awaiting your call.
*The views and opinions expressed are my own and do not necessarily represent the official policy or position of Primary Residential Mortgage, Inc.