Did you know that VA loans appeared even before World War II? The mortgage has helped millions of military service members and veterans to fulfill their dream of homeownership. VA loan has gained much popularity after the Great Recession and historically low rates were widely seen in various parts. However, lending requirements only got tougher and tougher at this time. However, many potential borrowers are not familiar with the advantages of VA loans yet.
The VA loan program offers a series of advantages over other mortgages. It is the right program for many borrowers; however, the loan is only about secondary benefits and forgiving underwriting. VA loan is backed by the U.S. Department of Veterans Affairs and it offers a set of advantages. If you are yet to find benefits of VA home loan credit score 550 in Houston, TX, you need to go through the following section.
Comes with a Government Guarantee
VA loan has beneficial terms because there is a government guarantee. The government guarantees that a part of the mortgage can be repaid when the borrower fails to make monthly payments. That’s why; the guarantee helps the professional lenders to present lucrative terms to the borrowers.
Closing Costs are usually Low
VA mortgage restricts the closing costs that a lender asks from the borrower. The loan becomes more affordable than any other non-traditional home loans in the market. As a borrower, you can utilize the saved money for moving costs, furniture, or home improvements in the future.
Lenient Credit Score Requirements
In recent times, every borrower struggles to maintain an excellent credit score. Therefore, military buyers also suffer a similar woe before purchasing a home. When the credit benchmark set by the conventional lenders is still pretty high, VA loan provides a degree of relief to the borrowers. The conventional mortgages ask for a minimum of 620 but the VA loan allows 550 credit scores. For the traditional loans, the borrowers are stuck between great interest rates and high credit score. However, VA mortgage puts an end to the crisis around credit score.
Funding Fee is Flexible
VA loan needs a funding fee which is an upfront cost depending on the mortgage amount. It also needs to focus on the down payment percentage and other factors. The funding fees are not mandated to be paid in cash. However, the administration permits the fee to be financed with the mortgage. Hence, there is nothing supposed to be due at closing. The funding fees are further waived when the veterans qualify for disability compensation. Even the surviving spouses of military service members can seek this benefit.
There is no Prepayment Penalty
The administration has a relaxed guideline when the borrower is willing to sell the home. This is only possible when the borrower can prove he/she does not need it anymore. So, the borrower does not have an early-exit fee or prepayment penalty when he/she wants to sell the home. Also, the restrictions about refinancing a VA loan are not there either.
So, do you think you can qualify for the VA loan based on the job experience? If you need further help, you can get in touch with a lender.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.