VA Home Loans: 3 Advantages That Make Them Unbeatable

The availability of VA home loans is something of a god-send for many current and former servicemen and women who want to buy their own home. These loans are made affordable, so that poor credit ratings can be ignored, and even modest salary earners can secure a home for themselves and their family.The chief advantage with borrowing from the VA is that the product they provide is a low interest mortgage, one that is dramatically cheaper than the normal options available. But while rock bottom interest rates are one advantage, there are more factors that ensure the deal is pretty much unbeatable on the market.In fact, compared to the home loans available from the usual mortgage providers, savings on interest, fees and charges can exceed $50,000 over the lifetime of the mortgage.1. No Down Payment or Extra CostsProbably the biggest advantage VA home loans have over the other options is the fact that no down payment is required. Normally, around 5% of the purchase price is required as down payment, so a home worth $150,000, for example, would require a single payment of $7,500. Depending on the lender and the value of the property, this share can vary between 3.5% and 10%.Also, many of the extra costs that come with such a large loan do not apply. These can range between taxes and escrow fees to title and homeowner insurance. Even low interest mortgages can end up costing more because of these factors. But a good mortgage broker will make sure it is the seller that picks up these closing costs.Other closing costs associated with home loans are settlement fees, document preparation fees, attorney fees, truth-in-lending disclosure statements, and a host of third-party fees. But the VA will ensure that these costs are kept to a minimum, making the deal a lot more affordable.2. Purchase ConditionUsually, home buyers have to get an appraisal of the property they are interested in buying, just to be sure it is worth the price that has been set. This costs money each time it is done, but with a VA home loan, this service is provided by the VA as part of the mortgage deal.  The idea is that veterans seeking a new home are protected from the sharks that operate in the market. And while an appraisal can always be done independently (if desired), the VA tries to make sure that the advantage of a low interest mortgage is not lost through factors. This is why they issue a Certificate of Reasonable Value.This service extends to a proper home inspection, to confirm that the property reaches acceptable levels of inhabitability. So, as well as the home loan, things like a full inspection of the plumbing system and building foundation are provided.3. Protect the BorrowerEven after securing a mortgage and buying a home, the borrower can be subject to extra fees and penalties. But with a VA home loan, the borrower is largely protected against unreasonable rates, if not protected completely against the penalties.For example, the VA ensure that borrowers do not have to pay any prepayment penalties, whereas the early repayment of the mortgage in full would normally incur penalties of tens of thousands of dollars.This can effectively, take away the advantage of a low interest mortgage, as can the so-called points (finders fee) that lenders often charge for finding the home loan in the first place. These fees are capped by the VA to keep costs low also.