Features of VA home loan program
There are three key mortgage programs that are backed by the US government through various agencies. These include FHA, VA, and USDA programs. These mortgages have various features that make them suitable for various groups that they’re intended for. The FHA program is designed to assist people with low scores, imperfect credit history and those who have low down payment amounts. The USDA loan target people who stay in rural parts of the US. The VA is a mortgage program that is designed for active members of the military, the veterans and certain spouses of those who have died in military action. There are various features that make the VA program the best for Dallas first time home buyers program. These include:
Zero down payments-the VA loan does not require any amount to be put down when applying for it. This is because the loan is guaranteed by the government. This loan therefore is the best for first time homebuyers who lack the amount to be put down when buying a conventional loan. Conventional loans for instance, require 20% of the total amount you’re applying for to be put down when applying for them. FHA mortgages on the other hand, demand that you put down 3.5% of the total loan that you’ve applied for. When you compare a VA loan with these two programs therefore, you’ll conclude that it’s the best as it does not require any down payments.
Nil mortgage insurance-When you apply for a loan and put down an amount that is less 20% of the total amount you’re borrowing, you’ll be required to pay mortgage insurance. The mortgage insurance protects a lender in case you default on loan repayment. Conventional loans and FHA programs require that you pay mortgage insurance. Dallas first time home buyers Insurance payments make the cost of a loan expensive. The good news is that when applying for a VA loan, you’re not required to pay mortgage insurance because the loan is covered by Veteran Affairs department.
Government guarantee-the VA loan are guaranteed by Veterans Affairs department. This means that in case you default on repaying your loan, VA will compensate the lender. This makes the program popular to many approved lenders who provide it with affordable rates.
Rate comparison-The VA does not make loans. The main role of VA is to guarantee and insure loans that are made by approved lenders-banks, credit unions and home loan lenders. The lenders offer the loans at their own rates. It’s advisable that you shop around to compare rates. You can then select a lender with competitive rates.
No prepayment penalty-in case you want to resell your home and make a prepayment, VA does not impose a prepayment penalty on you.
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