If you are a veteran looking for loans, one of the options you can access is VA loans. VA loans, short for Veterans Administration loans, are loans backed by the federal government and are only available for individuals who have served in the military. That said, there are times where you should opt for VA loans, and there are times you are better off with other types of loans. If you are unsure about whether a VA loan is the right choice for your current needs, here is what you need to know.
When not to get a VA loan
There are multiple instances when you are better off not opting for a VA loan.
The first example of this is when you are buying an expensive property as your home. That is because VA loans have a maximum value, which can vary from place to place. For example, some VA loans only allow you to borrow $700,000. If you are purchasing a property, like a home, for more than this limit, it is better to look for another loan. Investment properties are also ineligible for a VA loan, so it is not an option either.
Another example is if you have already used a VA loan once. While you can take out VA loans multiple times, there will be some fees that you need to account for. These fees can make the loan more expensive than other loans, so take the time to compare the alternatives to see whether they are more affordable than your VA loan.
When to get a VA loan
There are a few situations where a VA loan is preferable.
The first example is when you either want to lower a down payment significantly or do not want to make one. This is generally the case when looking for mortgage loans. For example, some lenders require you to have a PMI (private mortgage insurance) on loans with down payments less than twenty percent. With a VA loan, you do not need a PMI or make any down payment at all.
Another excellent example of when to use a VA loan is when the loan itself is much better than another loan option you may have. For instance, if a VA loan has a much better interest rate and a lower closing cost than another type of loan, it would make sense to opt for a VA loan. With this in mind, remember to spend time comparing different loans to the VA loans you are offered and go with the best option.
If you are looking for a loan that requires no down payment, no insurance, and generally offers better interest rates with lower closing costs, a VA loan is your best option. This is especially true if your credit score is not the best, where other types of loans may not be accessible to you. That said, there are plenty of loans in the market available, and you should compare all the options to ensure you make the most out of your finances.
Frontline Financial are mortgage professionals in the US who help veterans discover the best loan options to purchase new homes. If you are interested in applying for a mortgage loan, work with us today!