Is It Worth Using A VA Loan If You Have The Option?
Have you spent time serving your country, and now you qualify for a VA loan? If so, you may be wondering if this loan is worth it of it you should go with another type. Here is what you need to know about using a VA loan and how it can be beneficial.
VA Loans Don't Require A Down Payment
Many people use a VA mortgage because it does not require a down payment. It can be a great benefit if you simply don't have the cash on hand to give for a down payment, but still want to buy a home. Not making a down payment is not always a good thing, though. If you have the money, a large down payment can help lower how much you owe, which lowers how much interest you pay on the loan. In this situation, it does not matter if you use a VA loan because you are lowering the loan amount with a down payment.
VA Loans Don't Have PMI
One additional cost of a mortgage that is hard to avoid is private mortgage insurance, often referred to as PMI. It is the insurance that you pay for not having a big enough down payment, and it protects your lender if you are unable to cover your mortgage and lose the home. However, a VA loan is not the only way to get out paying PMI, since all you need to give is a 20% down payment. If you are already doing that to save on the interest rate, then it doesn't matter what kind of loan you use to avoid PMI.
VA Loans Allow For Early Payments
When getting your mortgage, you may be conservative by picking a 30-year loan and buying a cheaper home. Your income may change over time and cause you to afford larger mortgage payments. A VA loan allows you to pay that mortgage off early without any fear of paying a penalty. Unfortunately, some lenders force you to pay that penalty because they would rather have you refinance, while others allow you make additional payments at any time. While early payment are not a problem with VA loans, make sure you fully understand the early payment terms in case you end up making more money down the road.
Depending on your financial status, you may see some benefits by using a VA loan that are not an option with other types of loans. Work with a local mortgage lender to find out more information.