What is a VA loan?
A VA loan refers to a mortgage loan that is given to the military personnel of the United States. With a part of it being insured by the U.S. Department of Veterans Affairs. The first advantage of the VA loan is that it enables qualified veterans, active military officers and some military spouses to buy a house without down payment or any mortgage insurance cover.
Who qualifies for a VA loan?
A large number of military and National Guard, veterans, reservists and military spouses can obtain a VA loan. Service members and veterans are eligible depending on length of service and the applicant must have been discharged, and not in active duty, on any other condition than detestable.
Limitations of VA home loans?
Every veteran must also make a funding fee when utilizing his VA eligibility except where he is excused due to a service connected disability. The VA funding fee is a fixed fee charged on all purchases and refinances. Borrowers can either pay the fee in advance or finance in the loan. Whereas the veteran can access and re-access the VA home loan benefit. The percentage rate of the funding fee is higher after the first access.
Another thing that can be considered when secure a VA loan is the closing costs. In purchase deals, the closing fees are not financed through the loan but sellers can contribute not less than 4 percent of the selling price to closing expense which would otherwise be paid by the borrower, Rollins says. The loan might also attract a fee on the financing.