What are VA Loans?
VA loans typically refer to home loans given to qualified veterans. The Department of Veteran Affairs guarantees these kinds of loans.
Why get a VA Loan?
Many benefits can be gained from attaining a VA loan. The primary benefit is that VA loans permit individuals to buy property with a low down payment, and in some cases, no down payment at all. The other benefits of a VA loan are as follows:
• Lack of pre-payment penalty fees
• Lower potential closing costs
• Removal of premiums for mortgage insurance
• Potential for interest rate negotiation
• Possibilities for home warranties if a property under construction has been VA-inspected
• Options for VA aid for temporary incapability to pay, and
• Loan assumption by buyers if an individual wants to sell his property
There are no set price limits for a home to be purchased with a VA loan. Note that lenders will typically give a maximum of four times the amount of a VA entitlement, if an individual wishes to acquire property with no down payment. However, if you are capable of setting aside an amount of money to use for a down payment, you will qualify for a larger loan amount (the increase of which is proportional to the down payment). VA loan limits vary. In Hawaii, for example, the VA limit for a loan is $625,500.
The property to be purchased must be the individual’s main residence. VA loans are not for use in buying commercial properties or other properties for investment. You are required to document that you will occupy the home if you wish to obtain a VA loan. Also, some condo units are ineligible for financing under VA loans. Check with the VA loan department if you wish to purchase a condominium with their assistance. Also, VA loans are not available for buying properties in other countries. VA loans may only be utilized to finance homes in the United States, as well as properties in US territories.