Homeownership remains one of the best ways to build wealth and achieve financial security. With a VA loan, veterans can purchase a home with money that they would not otherwise have. And with rates on the rise, now is a great time to lock in a low rate on a VA loan.
Here are five things to keep in mind as you consider a VA loan:
Things You Should Know About VA Loans
- No Down Payment Required. VA loans don’t require a down payment, which can be a huge advantage for some buyers, particularly first-time homebuyers. It’s also a great benefit for borrowers with a lower credit score because they don’t have to come up with a down payment to get approved for the loan. For example, if you owe money on an ARM loan and rates just went up, you probably have to sell your home before the adjustment date to get a payment plan you can afford. If you have a VA loan, you can buy a new home without selling your existing home or taking money out of pocket.
- Streamlined Application Process. Unlike FHA loans, VA loans don’t require an appraisal to determine the value of the property. And you don’t have to worry about a credit check, high debt-to-income ratio, or even your current employment status. The VA guarantees the loan up to a certain amount, which makes it possible to offer the loan to more borrowers. The result is a streamlined application process that is often much quicker than the typical mortgage application process.
- No Income Verification. VA loans don’t require a borrower’s income to be verified. With other types of loans, especially those with income restrictions, it can be harder to qualify if your income is variable. But VA loans are income-driven, which means if your income is variable, you can lower the amount of your mortgage payment by extending the length of your loan.
- No Private Mortgage Insurance. If you make a down payment of at least 20 percent, you can qualify for a VA loan without having to pay private mortgage insurance (PMI). If you don’t have the cash for a down payment, you can finance it through your VA loan. And if you don’t want to take out a home equity line of credit (HELOC) or other mortgage, you can do a no cash-out refinance from another lender to get rid of your PMI.
- No Credit Score Requirement. VA loans are credit score-optional loans. What this means is that you don’t have to have a high credit score to qualify for a VA loan. If you have a lower credit score, you may be able to improve your credit score over time by paying down your debt, paying off collection accounts, and more. If you can’t improve your credit score enough to qualify for a conventional loan, you can still get a VA loan.
Your VA Loan Experts at Desert Springs Mortgage
Military personnel and spouses have a great opportunity to obtain an FHA loan, but that does not mean that they should discount the value of a VA loan. The VA loan may offer greater flexibility for the military borrower, allowing for a lower credit score and no income verification, depending on the type of VA loan chosen. It is important to do your own research and work with a reputable lender to see which financial avenue is best for you.
Desert Springs Mortgage offers VA loans in Phoenix that are designed to help veterans, active military members, and qualified spouses purchase a home. Let us help you on your journey to homeownership! If you are a veteran looking for a VA loan or know someone who may be interested, contact us today at (623) 432-1309.