Last Updated on July 8, 2022 by Luke Feldbrugge
There’s an alarming percentage of US Veterans who don’t know enough about buying a house with a VA loan. Also, there are an even more significant number of Veterans who don’t understand the mechanics of this beneficial home financing product.
So, dear Veterans: Here is what is misunderstood and here’s what you need to know about the benefits of buying a house with a VA loan.
Many Do Not Know or Think to Use the VA Loan
The Navy Federal Credit Union recently surveyed 1,000 Active Duty service members and Veterans from around the country to highlight their thoughts on VA loans and what may be holding them back from using one. The survey found that a whopping 29 percent of Veterans who own homes didn’t use a VA loan because they didn’t know about VA loans or didn’t think to use one.
Nearly half of Active Duty and almost one-third of Veterans surveyed believe they can only use VA loan financing once. This is not the case.
Misconceptions About Buying a House with a VA Loan
Most alarming among the misconceptions about buying a house with a VA Loan is that both Active Duty and Veterans believe this important financing option will cause delays in their home-buying process.
Common Misconceptions about VA Loans:
- Longer Processing Times: 59 percent of Active Duty and 41% of Veterans believe VA loans have longer processing times
- Delays Due to Paperwork: 58% of Active Duty and 40% of Veterans think VA loans will have delays due to all the paperwork involved
- Minimal Savings: Many military members believe VA loans do not provide much savings compared to conventional loans
When in fact, the VA Loan program offers a significant benefit for service members. These loans may require:
- NO down payment
- NO private mortgage insurance
- Provide negotiable interest rates
Benefits of Buying a House with a VA Loan
Here’s what a VA-backed purchase loan can offer:
- No down payment as long as the sales price isn’t higher than the home’s appraised value (the value set for the home after an expert reviews the property)
- Better terms and interest rates than other loans from private banks, mortgage companies, or credit unions (also called lenders)
- The ability to borrow up to the Fannie Mae/Freddie Mac conforming loan limit on a no-down-payment loan in most areas – and more in some high-cost counties. You can borrow more than this amount to make a down payment
- Learn about VA home loan limits
- No need for private mortgage insurance (PMI) or mortgage insurance premiums (MIP)
- PMI is usually required on conventional loans if you make a down payment of less than 20% of the total mortgage amount
- MIP is what the Federal Housing Administration (FHA) requires you to pay to self-insure an FHA loan against future loss
- Fewer closing costs, which the seller may pay
- No penalty fee if you pay the loan off early
Homes for Heroes can Save You Money (in Addition to Receiving VA Loan Benefits)
The process of buying a home can be difficult to navigate. If you’re getting a VA loan, make sure you work with a real estate agent and mortgage professional who understands the VA home loan process. Homes for Heroes real estate and mortgage specialists can offer some valuable insight into helping Active Duty, Reserves and Veteran military members achieve homeownership by sharing more information about the VA Home Loan Guaranty Program and helping to dispel common myths.
When you work with a Homes for Heroes real estate and mortgage specialist, heroes receive an average of $3,000 in Hero Rewards savings after closing on a home. Sign up to talk to a Homes for Heroes specialist today.