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The VA Home Loan is, according to the VA, one of its most sought after benefits. It can be used to buy a home, even if it is in the pre-construction stage, and it can even refinance an existing loan you already have.
To learn more about the basics of the VA Home Loan, you can refer to this page.
In addition, here are some details that many miss when looking into this benefit.
The loan is only available for certain types of properties.
Although you can use the VA Home Loan to finance the building of your home, you can’t use it to buy land or toward a fixer-upper. The loan requires the property to be ‘move-in’ ready. If you’re planning on constructing a home, there has to be established plans to do so in order to use the VA Home Loan.
No required mortgage insurance.
The VA Home Loan does not require the borrower to have mortgage insurance of any kind. Typically, mortgage insurance is used when a borrower doesn’t put at least twenty percent down, and is charged through monthly fees. However, that isn’t a necessity when taking out a VA Home Loan, allowing vets to get out of another monthly payment.
There is a mandatory fee.
Despite the amount a vet can save with the VA Home Loan, there is a fee for purchasing or refinancing a loan. When you take out a VA Home Loan, there is a VA Funding Fee which is typically two percent of the original loan amount. This is a mandatory fee that funds the entire program, but it can be waived if the veteran has a service related disability.
No prepayment penalty.
If you want to pay extra towards your monthly payment, you can without any kind of extra fee using a VA Home Loan. This is a valuable feature because it will decrease the amount of time and interest from your loan balance.