VA Loans Benefits - First Time Home Buyers
When looking to buy a home one of themain things that hinder people (especially first time buyers) is thedown payment. Often times, potential home owners can't afford to paya 20% down payment on a home so they stick to renting and struggle tosave up for a decent down payment. VA home loans help fix this problem byallowing a zero dollar down payment! Many people can afford to payfor a monthly mortgage, utilities, and expenses of home ownership butsupplying tens of thousands of dollars as a down payment is what setsthem back. So take advantage of the zero dollar down payment optionthat VA loans offer.
Another great benefit of VA loans forfirst time home buyers is that their easier to qualify for thanconventional home loans. Due to the fact that the loans are backed by the government, the qualifications aren't
as strict. Conventional loans usually require a higher income for being approved and the borrower's credit is usually a big determinant as to whether or not they will get approved. A lot of young first time home buyers generally don't have a lot of credit at all. Because of this lack of credit, it may be more difficult to attain a conventional loan due to the fact that you have no prior record of making payments over a long period of time.
VA loans also save you money on your monthly mortgage payments because they don't require private mortgage insurance (PMI). This will save you hundreds of dollars every month, which first time home buyers will greatly appreciate. VA loans are one of the best ways for financing your first home because they will save you money, and make the approval process easier than a conventional loan. So if you're in the process of purchasing a home, check and see if you qualify for a VA loan and take advantage of all it has to offer.
Difference between a Conventional Loan and a VA loan
VA loans are a great benefit availablefor veterans and their children. There are plenty of advantages of VAloans and Veterans typically chose them over conventional loans. Mostof the disadvantages of VA loans are advantages of Conventionalloans. But it's best to know exactly what the difference is betweenconventional loans and VA loans so you can make the best decision foryou and your goals.
To start, the most obvious differencebetween VA loans and conventional loans is that VA loans don'trequire a down payment. Most conventional loans require up to a 20%down payment as a qualification. This alone leads many qualifiedborrowers to choose VA loans of conventional loans. Young first timebuyer's with little to no savings usually can't afford a $10,000 downpayment for a home, so VA loans are great in that aspect.
VA loans are also backed by thegovernment, which makes it much easier to get approved. Theborrower's credit isn't a much of a factor as it is with conventionalloans.
VA loans are great but they do havesome disadvantages. The pool of home you have to choose from islimited. The VA loans have a maximum amount that they loan. Also, theloans are only good for homes in certain areas, so your dream homemay not qualify for a VA loan. With conventional loans, the borrowerhas the potential to borrow any amount that they are approved for, soyou have much more to choose from. Also, you can get any home youwant, anywhere you want.
If you're looking to engage in realestate investing, you'll have to go with a conventional loan. VAloans can only be used for your primary residence, so it's not veryuseful for real estate investors.
So as you can see there are plenty ofdifferences between VA loans and Conventional loans apart from justthe down payment. Conventional loans allow home owners more freedom,while VA loans are aimed to save money and lighten the financialload. Take all the advantages and disadvantages of both into accountwhen purchasing your next home.
Resource: http://www.benefits.va.gov/homeloans/
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