How a VA Loan Specialist Can Help You Save Money For first time homebuyers, a VA loan is simply one of the best options out there, and many veterans aren't even aware of this benefit. There are, however, many steps involved when applying for this type of loan. A VA Loan specialist can guide you through these steps and ensure that you take advantage of all the perks, saving you tens of thousands of dollars over the life of your loan. Here are some ways VA loans save you money. No Down Payment When you're starting out in life, coming up with money for a down payment can cause financial hardship. While FHA loans require a minimum down payment of 3.5 percent, VA borrowers can purchase a home with no down payment at all. No Private Mortgage Insurance Requirement (PMI) Perhaps the biggest money saver VA loans offer is not having to purchase private mortgage insurance. A typical FHA loan with a down payment of less than 20 percent requires both an upfront and monthly mortgage insurance payment. The upfront payment is equal to about 1 percent of the loan. These borrowers also pay an annual mortgage premium of about 1 percent of their loan amount. The upfront payment on a $150,000 home would be $1,500, and the annual premium would add approximately $120 to a borrower's monthly payment. This can add up to over $20,000 over the life of the loan. Lower Rates The federal government backs VA loans. This means banks carry less risk and can offer lower interest rates. VA rates are usually 0.5 to 1 percent lower than conventional rates. When purchasing a $150,000 home, VA borrowers can save $14,760 with a 0.5 percent rate reduction and $28,000 with a 1 percent reduction. A VA loan specialist will work with you to get the lowest rate. Closing Costs The law prohibits VA borrowers from paying certain closing fees, including underwriting and attorney fees. This is an area where the VA loan specialist plays a pivotal role. Sellers can pay up to 4% of closing costs. Agents and lenders can also pay closing costs. If a borrower still needs to cover some closing costs, the lender can charge a 1 percent origination fee instead of charging prohibited fees. No Prepayment Penalties
All VA loans prohibit prepayment penalties. This means you can pay off your loan early and save thousands of dollars in interest payments. If you have an existing loan, a VA loan specialist can help you reduce your monthly payment with a VA streamline refinance loan. Borrowers do need to keep in mind that there is a one-time, VA funding fee that helps offset the cost of the loans to taxpayers. These fees range from 1.25 percent to 3.3 percent. The fee can be built into the loan. This will reduce the amount due at closing, but monthly payments will increase. A seller may agree to pay for all or part of the funding fee as well. What could you do with an extra $20,000 or even $50,000? Pay your mortgage in full early? Send your kids to college? A VA loan specialist can walk you through each step of the loan process, getting you the well-earned best deal. Mortgage Originator Jimmy Vercellino, specializing in VA Loans, helps veterans use their VA loan benefit to their greatest advantage. For more details call us at 480-351-5904. Visit site: https://www.valoansforvets.com/va-pre-loan-faq/ The views expressed here are those of the individual author and do not necessarily represent those of First Choice Bank (NMLS #: 177877) and First Choice Loan Services Inc. (NMLS #: 210764), 7600 E. Doubletree Ranch Road, Scottsdale AZ 85258. Equal Housing Lender. www.fcloans.com/disclaimer/ www.fcbhomeloans.com/privacy