If you are a current or former member of the U.S. military, and are considering purchasing a home, taking out an VA mortgage may be beneficial for your family! With special perks tailored to members of our Armed Forces, read on to learn more about how this type of loan can help make owning a home easier - as well as few drawbacks associated with them.
Advantages of VA Mortgage
1. No down payment requirement: VA mortgages do not require a down payment, which means that you can purchase a home with no money down. This can make it easier for you to purchase a home if you do not have a large down payment.
2. No mortgage insurance requirement: VA mortgages do not require mortgage insurance, which is an additional cost that you will have to pay every month. This can save you thousands of dollars over the life of the loan.
3. Lower interest rates: VA mortgages can have lower interest rates than conventional mortgages. This means that you will pay less interest over the life of the loan, which can save you money in the long run.
4. More flexible eligibility requirements: VA mortgages have more flexible eligibility requirements than conventional mortgages. This means that if you have a low credit score or a high debt-to-income ratio, you may still be able to qualify for a VA mortgage.
Disadvantages of VA Mortgage
1. Funding fee requirement: VA mortgages require a funding fee, which is a one-time fee that is paid at closing. The fee varies depending on the size of your down payment and whether you are a first-time or subsequent user of the VA loan program. Disabled veterans can have the funding fee waived. VA Funding Fee Information.
2. Property requirements: VA mortgages have stricter property requirements that the home must meet. If the home does not meet these requirements, you may not be able to qualify for a VA mortgage.
3. VA appraisal process: VA mortgages require an appraisal of the home to determine its value. The VA appraisal process can be more strict than other types of appraisals, and the appraiser may require repairs to be made before the loan can be approved.
4. Loan limits: VA mortgages have loan limits that vary by county. This means that you may not be able to borrow as much money to purchase a home as you could with a conventional mortgage. This link will provide you with current VA Loan Limits in the majority of cities in Maryland.
Financing a home can be complicated. A VA mortgage has several potential benefits, such as no down payment needed and lower than average interest rates - however the cost of getting secured does come with its own caveats like having to pay funding fees or meeting certain property requirements. Taking into account your financial situation and weighing up these pros & cons are key before choosing whether to go for this type of loan option.
