VA Home Loan Advantages
The Department of Veterans Affairs recently updated its official site to include an on-line version of its publication, “VA Home Loans – A Quick Guide For Homebuyers and Real Estate Professionals”.
This guide outlines some of the most important features of a VA guaranteed home loan; these features include details about the cost-saving benefits of a VA mortgage, some borrower rights, and other crucial details. For example, do you know about the various types of VA home loans available to qualified borrowers? They include:
Traditional fixed payment VA mortgages: These VA loans feature constant principal and interest: increases or decreases may be expected in property taxes and homeowner’s insurance coverage, according to the VA official site.
Graduated Payment Mortgage-GPM: This type of VA mortgage loan offers low initial payments which “gradually rise to a level payment starting in the sixth year” according to VA.gov.
Growing Equity Mortgages-GEMs: This type of VA loan option may not be available in all areas, but where it is available, the loan features “gradually increasing payments with all of the increase applied to principal, resulting in an early payoff of the loan”.
Hybrid Adjustable Rate Mortgages: The VA official site says of these mortgages, “VA is authorized to guarantee hybrid ARM loans where the initial rate remains fixed for at least 3 years. The initial adjustment can be as much as 2 percent if the fixed rate period is 5 or more years. Annual adjustments thereafter are limited to 1 percent if the fixed rate period is less than 5 years, and 2 percent if the fixed rate period is 5 or more years. If the fixed rate period is less than 5 years, the initial adjustment is limited to 1 percent and the annual cap to 5 percentage points.”
Traditional ARM loans: VA loan rules also permit these “traditional 1-year ARM loans where the rate is adjusted annually. Annual adjustments are limited to 1 percent and the maximum interest rate increase over the life of the loan is limited to 5 percentage points.”
As stated in the VA Loan Quick Guide, many VA borrowers can take advantage of the VA zero money down loan option, with a maximum loan of 100% of the appraised value of the property. According to the VA, “Due to secondary market requirements, however, loans generally may not exceed $417,000 ($625,500 for loans in Hawaii, Alaska, Guam and U.S. Virgin Islands). This figure is subject to change each year.”
In addition, there are no private mortgage insurance premiums required, there are limitations on the buyer’s closing costs, and a thirty-year loan option “with a choice of repayment plans” as mentioned above.
Do you have a question about VA home loans? Ask us in the comments section.