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Is a VA Loan the Best Option If you plan on buying a house in the near future, there are a few mortgage options available. One potential option is called a VA loan. This is a loan that has been backed by the Department of Veterans Affairs, and it could provide you with some added flexibility that you can use to purchase a house. Is a VA loan right for you? There are a few points to keep in mind.

Who Qualifies For a VA Loan?

First, not everyone is able to access a VA loan. This is a loan that is generally only available to active members of the US military, veterans of the US military, and surviving spouses of service members. There are different service requirements that you need to meet before you can qualify for a VA loan, so if you have questions about your service record, consider reaching out to an expert who can clarify whether you meet the requirements.

What Are the Top Benefits of a VA Loan?

There are a few reasons why you might want to take advantage of a VA loan. First, you don’t need to put any money down. You can take out a home loan for 0 percent down, making it easier to purchase the house of your dreams. Second, even though don’t put any money down, you don’t need to pay for mortgage insurance, helping you save money. While you can still put money down if you would like, there is no requirement for you to do so.

Overall, the closing costs tied to a VA loan are significantly lower, so you don’t have to worry about exorbitant fees at the closing table. Finally, if you decide to pay off the loan early, you should not have to worry about incurring a prepayment penalty.

Consider Applying For a VA Loan

There are a lot of unique requirements that you need to meet if you want to qualify for a VA loan, but it could help you buy a home without having to put anything down at all. You should partner with an expert who has experience navigating this situation. That way, you can find the best loan option to meet your needs.

Should You Pay Discount Points When You Get Your Mortgage One of the challenges you will face when deciding how much money to put down on your new home is whether to put down a larger down payment or to take a bit of money from your down payment and use it to buy “discount points” to lower your interest rate.

There are pros and cons to doing both and each borrowers situation will be different so it’s important to understand which option is best for your individual situation. Some factors you should consider include:

Cost of borrowing – generally speaking, to lower your interest rate will mean you pay a premium. Most lenders will charge as much as one percent (one point) on the face amount of your loan to decrease your rate. Before you agree to pay points, you need to calculate the amount of money you are going to save monthly and then determine how many months it will take to recover your investment. Remember, closing points are tax deductible so it may be important to talk to your tax planner for guidance.
Larger down payment means more equity – keep in mind, the larger your down payment, the less money you have to borrow and the more equity you have in your new home. This is important for borrowers in a number of ways including lower monthly payments, better loan terms and potentially not having to purchase mortgage insurance depending on how much equity you will have at the time of closing.
Qualifying for a loan – borrowers who are facing challenges qualifying for a loan should weigh which option (points or larger down payment) is likely to help them qualify. In some instances, using a combination of down payment and lower rates will make the difference. Your mortgage professional can help you determine which is most beneficial to you.

There is no answer that is right for every borrower. All of the factors that impact your mortgage loan and your overall financial situation must be considered when you are preparing for your mortgage loan.

Talking with your mortgage professional, and where appropriate your tax professional, to help you make the decision that is right for your specific situation.

Is A VA Loan The Best Option For Your Needs?

Should You Pay Discount Points When You Get Your Mortgage?

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