Do you know what a VA loan is? It is a type of loan that requires no down payment at all and is a type of loan given by private lenders that the Department of Veterans Affairs partially backs. Those eligible for VA loans can use them to purchase their primary home or even refinance an ongoing mortgage.
That being said, while VA loans seem pretty straightforward, there are many aspects about VA loans that many people do not know about. For example, did you know that VA loans are reusable? That, and many more things about VA loans are what we’re going to tell you about today:
1. VA Loans Are Reusable
As mentioned a while ago, we told you that VA loans are reusable. What we mean is that you aren’t stuck with just one VA loan! You can use your VA entitlement over and over again, given that you’ve paid off every loan. Remember, the VA loan is still given by lenders, and if you can prove that you’re a reliable borrower, you can borrow as many VA loans as you need.
2. VA Loans Only Apply to Specific Homes
When deciding to obtain a VA loan, it is vital to know that it isn’t usable for every property. Only properties that are in “ready to move in” condition are acceptable for VA loans. Of course, such properties can include any property, from condominiums to single-family homes.
3. VA Loans Are Not Issued by the VA
Despite what its name may imply, the VA doesn’t give VA loans. The VA’s job here is to only partially back the loan amount, usually a quarter of the loan. For instance, if you borrowed $400,000, the VA will take care of around $100,000. However, thanks to this partial guarantee, lenders can more confidently offer loans at incredible rates and terms, making VA loans super attractive.
4. VA Loans Have a Mandatory Fee
Although VA loans have no down payment to be covered, there are still fees that you need to cover. This fee is known as the VA funding fee and goes to the VA to keep the program going. Keep in mind that the fee can be rolled into the loan amount, and it can even be waived entirely for those who have been disabled for service-related incidents.
5. VA Loans Have No Prepayment Penalties
Unlike many other mortgages out there, VA loans have no prepayment penalties. This means that whenever you feel like it and whenever you can, you can make extra payments to save on interest costs and shorten the time you need to spend to pay off the loan.
6. VA Loans Have No Borrowing Limit
There’s no limit on the amount of money you can borrow on a VA loan. The only actual limit you will face is how much the lender is willing to lend to you. Regardless, this is a massive benefit to you! Just imagine not having to pay 20% of a $500,000 home as a down payment. That’s a lot of financial burdens lifted from your shoulders.
With all of that in mind, we hope you’ve learned something new about VA loans and now realize a new way to take advantage of and make the most out of VA loans! However, keep in mind that you still want to carefully consider the lender you’re working with. Even if they’re offering VA loans, it is essential to consider how happy their customers have been and what kind of reputation they carry. Also, try and get as many options as possible when picking a VA loan. This is because different lenders have different offerings, and you want to make sure you work with a trustworthy lender that offers you the best deal!
Total Lending Concepts offers home loans to fit every financial need and situation, no matter the borrower. If you are looking for VA loans in Colorado Springs, reach out to us today!