VA Loan Summary
Here are the major things that you will want to know about VA-Insured Loans.
- The majority of VA-insured loans require no down payment.
- If your loan doesn’t require a down payment, you can finance up to 100% of the home’s value plus approved fees.
- Loans generally may not exceed $417,000.
- You can negotiate your interest rate with the lender.
- Since there is no MIP (Mortgage Insurance Premium) with a VA loan, your monthly payments may be lower compared to other types of loans.
- The VA controls the closing costs that you can be charged by the lending institution.
- Require an appraisal.
- Loans may be as long as 30-years
- There are several repayment plans to chose from:
- Traditional fixed payment. These are made up of the principle, interest and escrow for taxes and homeowners insurance and the like.
- Graduated Payment Mortgage – The GPM plan has low initial payments which gradually rise to a fixed payment starting in the sixth year.
- The Growing Equity Mortgages – These are not available everywhere. When you can get them GEMs provide gradually increasing payments with all of the increase applied to principal, not interest. The GEM plan will help you pay off your home earlier.
- If you build a house with a VA-backed loan, the VA will require inspections at standard checkpoints in the construction process. The inspection makes sure that the builder is sticking to the plans, using the approved materials, etc. And, a 1-year warranty is required from the builder to guarantee that the house was built according to the approved plan and specifications. If the builder provides an approved 10-year warranty then the VA may only require a final inspection of the structure.
- Assumable mortgages are permitted but the buyer must pass a VA approval of the assumer’s credit.
- You can repay your loan early without any kind of penalty.
- Financial counseling is available if needed.
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