Are you looking for some information on VA loans? Do you know what a VA loan is and how it works? These are just some of the questions you may be asking yourself. In this article, we are going to cover the basics of VA loans and what people can expect when using them. Armed with this information you should have a good understanding of what this type of loan can do for you.
First, what is a VA loan? A VA mortgage is actually a refinanced mortgage offered by the United States Department of Veterans Affairs to non-veterans. All veterans who served our country are eligible for these loans. Since the beginning of the Iraq and Afghanistan wars, VA Loan assistance has become one of the most popular ways for vets to get money to afford a new home or remodel their existing home.
What many people do not realize is that many of these loans are fixed-rate mortgages. The interest rate reduction allows veterans to lock in a lower monthly payment than they would receive if they had purchased a new home from a traditional lender. These loans are also much easier to qualify for than some other types of home loans out there. This is because it is much easier to qualify for these loans than it is to qualify for most other types of home loans.
The first question most borrowers want to ask is what a VA refinance does for them. A VA loan works exactly like any other fixed interest mortgages. The borrowers pay taxes, the VA then owns the house so it never has to be repossessed. There is a slight difference though between these loans and other mortgages.
Veterans who use VA mortgages to purchase homes become homeowners by purchasing homes with a VA mortgage loan and paying off the original loan. The government pays off the original loan plus interests and fees. This leaves the borrowers with either a fixed or a decreasing monthly payment. Many of the borrowers who use these loans can make their payments without missing them.
The other major difference between these loans and any other type of mortgage insurance is the Federal Housing Administration fees. Three FHA fees must be paid for a borrower to qualify for a VA refinance. These fees are the first monthly fee, the second quarterly fee, and the third annual fee. When calculating how much money a borrower can save by using VA refinance loans, they add in these fees to get the final number.
A third reason why borrowers use VA loans instead of other types of mortgages is that they offer a lower interest rate. This comes as a result of how the FHA guarantees the loan. It is possible to find many lenders that will finance high-quality VA loans but most of these lenders have strict requirements for borrowers. To apply for these loans, borrowers must be retired personnel who are living on a fixed income. This ensures that these low-income, service members will remain qualified for mortgages regardless of their income level.
One other positive aspect of VA loans is that they are tax-deductible. This is because the funds from these loans go directly to the tax-free Social Security benefits that the borrowers will receive once they qualify for Social Security. Even though a borrower has to have a non-zeroed down payment, the monthly payment for a VA refinance is still much less than what one would pay with private mortgage insurance refinance loan.