Vets are missing out on va home loan entitlement
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One of the biggest benefits available to U.S. military service members and veterans is the VA home loan. Since 1944, the VA home loan program has helped millions of military families purchase and refinance their homes, saving them hundreds of thousands of dollars in the process.
You’d think the cost savings alone would entice veterans to apply. Unfortunately lack of awareness and misinformation keep many away. Based on numbers from the VA, it’s estimated that 89 percent of veterans don’t even use their VA home loan entitlement. Here are four of the major cost-saving benefits these vets are missing out on:
No down payment—Saving enough money for a down payment is a homeownership barrier for many Americans. Most loan programs require a down payment of at least 3.5 percent, but a VA home loan allows you to finance 100 percent of the house. While this doesn’t necessarily save money on the home’s overall cost, it does allow you to put that money toward moving and improvements.
No private mortgage insurance—Unless you’re able to put down 20 percent, most conventional loans require you to pay private mortgage insurance to protect the lender in case you default. This can add an extra couple hundred dollars to your monthly mortgage payment, but VA loans don’t require private mortgage insurance. In fact the VA prohibits lenders from charging it because they are assuming all the risk by guaranteeing the loan.
Competitive interest rates—Because the VA backs every VA home loan, it’s not uncommon for lenders to offer more competitive interest rates. Even half a percentage point can make a huge difference on your monthly payment. Shop around and find out which lender is willing to offer you the best interest rate.
Interest Rate Reduction Refinancing Loans—One of the unique aspects of the VA home loan program is the ability to do an Interest Rate Reduction Refinancing Loan (IRRRL), also known as a streamline refinance. With a streamline refinance, you can refinance your loan to a lower rate without going through the loan approval process again. The lender simply uses the paperwork you submitted before to adjust the rate of your loan. IRRRLs can result in significant savings, as evidenced by this infographic.
As you can see, the VA home loan program is a major benefit for veterans looking to purchase or refinance a home. From no down payment requirements to Interest Rate Reduction Refinancing Loans, the benefits of this program have saved countless veterans hundreds of millions of dollars. If you’re a veteran, you definitely don’t want to let your VA home loan entitlement go to waste.