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Video: Top 5 Benefits of the VA Home Loan Program

How do I know if a VA Loan is right for me?

There are advantages and disadvantages in getting a U.S. Department of Veterans Affairs (VA)-guaranteed loan. Advantages include being able to buy a home with no down payment (as long as the sales price doesn’t exceed the appraised value), as well as the absence of the private mortgage insurance (PMI) requirement. PMI may cost up to one percent of the loan amount each year.

The VA loan program limits the closing costs you could be charged. You can also prepay your mortgage without a penalty. Also, if you run into some temporary financial difficulties, the VA may be able to offer you some help.

There can also be disadvantages to a VA loan. For example, a VA loan could have a higher interest rate than a conventional loan, although interest rates on VA loans are negotiable. Additionally, most borrowers are required to pay a VA loan funding fee (currently between one and three percent of the amount of the loan). Also,if you opt for a loan without a down payment, it's important that you plan to stay in the home for a while because a drop in home values could quickly put you “upside down” on your mortgage, leaving you owing more than the home is worth.

The larger the down payment you are able to make, the more cushion you have to prevent this from happening.

Questions? We are happy to help. Call us at (707) 763-6290 or apply now.

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