In the USA ,the federal government offers many benefits to the men and women who served in the armed forces. One such benefit is the VA home loan program. The VA military home loan can be used to either purchase a new home or refinance an existing one. This loan is available to all active duty military and honorably discharged veterans. Although the Dept of Veterans Affairs (VA) does not actually lend out the money they do guarantee or insure the loans. Military personnel and veterans can go to any bank or mortgage company that participates in the program to apply for their military home loan.
There are many advantages to be had from using a military home loan over a conventional home loan and these are shown below.
- The borrower does not need to make a down payment. So as from the 1st January 2006 a member of the armed forces or a veteran could buy a home for $417,000 without a down payment. Although there are many conventional loans available with no down payment facilities, you will have to pay higher interest rate for this privilege. However with a military home loan you don’t. In fact you pay the same market rate whether you make a down payment or not.
- The VA home loan interest rate is often comparable with or in some cases even lower than many conventional loan rates.
- While the VA does not require a veteran to make a down payment, there are still closing costs involved that the borrower will incur. These usually average at about 3-5% of the loan amount. However, with a military loan , the VA allows the seller to pay all of the closing costs up to 6% of the loan amount. So with such a home loan a member of the forces or a veteran can buy a home for up to $417,000 without having to make a down payment or pay any of the closing costs.
- When using a military home loan a veteran or military personnel do not have to pay mortgage insurance. As this can add a significant amount to the monthly payments, not having to pay such an amount is really a plus to those borrowers taking out this type of loan.
As you can see there are many advantages to be had for both serving military personnel and veterans in taking out a VA military home loan.