BlogHomebuyingFinancial IQ November 06 2020

Surprising Facts About VA Loans

A VA loan can help eligible veterans purchase the home of their dreams, but they come with a few conditions a buyer should understand.

If you’re a veteran shopping for a home, a VA loan can be an incredible way to help you purchase your dream home. But it’s important to understand what these loans are, how they differ from traditional loans, and what some of their unique advantages and drawbacks are.

What is a VA loan?

A VA loan is not a loan from the Veterans Administration (VA) but rather guaranteed by the VA. This means the VA backs the loans issued by local credit unions, banks, and mortgage companies should the borrower default on it.

VA loans are a benefit provided to those with military service, making it easier to qualify for than a typical mortgage and without requiring a down payment or mortgage insurance. The function of these loans is to make it easier for military members, veterans, and military spouses to buy or refinance a home.

Determining if a VA loan is the best fit for you depends on your unique financial circumstance as well as the type of property you want to buy. Knowing a few key facts about these loans can help you set your expectations and make the most informed decision when buying a new home.

Surprising VA Loan Facts You Need to Know

  1. VA loans come in all shapes and sizes. Just as you would shop for a traditional mortgage, you can choose VA loans of all types, including long-term fixed or adjustable-rate. You can also use one to refinance your existing home.
  2. Not every property is eligible. For example, VA loans must be used to purchase primary residences and cannot be used for co-op purchases or vacant land. However, vacant land may be included in a VA loan if it is paired with a new-construction loan.
  3. There is a funding fee. This fee is based on the type of loan and total amount borrowed and covers the cost of obtaining a VA loan. The higher your down payment, the lower your fee. You can find a va.gov chart showing funding fee rates based on your down payment here.
  4. There is no monthly mortgage insurance. For many borrowers with less than 20% down payments, the lender charges a monthly fee to insure the loan, but in this case, VA loans do not because the funding fee covers this. This means you can afford more home for the same monthly payment.
  5. The VA loan benefit changes with each use. Borrowers may use VA loans more than once, but after their first time on a VA guaranteed loan, the associated funding fee will increase.
  6. Future buyers can assume your loan. If a future buyer is also VA-eligible, they can assume, or take over, your loan at the same rate, which can be an advantage particularly if interest rates have climbed since the original buyer secured their loan.
  7. There are no prepayment penalties. Some banks penalize borrowers with traditional mortgages for paying off their mortgage early. With a VA loan, you can make extra payments over the life of the loan without penalty, paying it off sooner and saving you thousands of dollars in interest.

 

At Eagle Home Mortgage, we know mortgages aren’t one size fits all. If you’re a veteran or active-duty military looking to purchase a home from the Lennar family of builders, we can help you get started with your application process today.

Search Results for query

November 25 2020

Success Story: A Single Mom’s Dream

How a police officer on a budget ended up with a home she never thought she’d have, thanks to one dedicated Eagle Home Mortgage loan officer.

Read More

November 17 2020

How to Get Pre-qualified for a New Home Loan

These easy steps will help you find out what you can afford to be ready to buy.

Read More

November 06 2020

Surprising Facts About VA Loans

A VA loan can help eligible veterans purchase the home of their dreams, but they come with a few conditions a buyer should understand.

Read More

October 21 2020

What is an FHA Loan?

For borrowers with tight cash or tricky credit, an FHA loan can be the answer. But not every situation is a good fit for these mortgage loans. Find out if one is right for you.

Read More

October 07 2020

Homebuyer Solutions: Making Dream Homes a Reality

Our Homebuyer Solutions Group helps successfully secure financing for homebuyers with credit challenges.

Read More

September 30 2020

20 Easy Ways to Turn Your House into an Autumn Sanctuary

Here are 20 cozy, simple ways to decorate for fall.

Read More

September 24 2020

Conforming vs. Nonconforming Loans

When financing your new home, there are just a few things you need to know about the types of loans you might be choosing from.

Read More

September 16 2020

Online Closing Options: Closing Faster, Smarter, Safer

Health concerns, purchasing out of state, or other life interruptions can make closing in person difficult — and that’s why we’ve created two new options for borrowers, our Eagle Express Close and Remote Digital Closing Experiences.

Read More

September 02 2020

6 Cheap and Easy Ways to Increase Your Home Value With Curb Appeal

There are several affordable, DIY curb appeal options to increase your home value that can get you some serious sweat equity.

Read More

12345Last

Mortgage Calculators

Crunch the Numbers With Our Helpful Mortgage Calculators

Payment Calculator

payment calculator

Payment
Calculator

Affordability Calculator

affordability calculator

Affordability
Calculator

Refinance Calculator

refinance calculator

Refinance
Calculator

The Modern Digital Mortgage with a Personal Touch

Paperless. Effortless. Awesomeness TM

Simplify the home financing process with our Digital Mortgage. We'll be here to help navigate you through the entire process.

Get Pre-qualifiedWhat is a Digital Mortgage?