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Is now the right time to use my VA Loan?

By: Grant Moon 08/02/12 08:15 am

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Cheaper to Buy vs. Rent

With historically low home prices and interest rates, it is has become more economical to buy versus rent in many areas. According to Trulia, a real estate company that publishes local real estate market studies, it is less expensive to purchase than to rent in 98 of 100 major cities in the US. Because less people were buying properties, coupled with the unfortunately foreclose crisis, more demand in the rental market occurred. The law of supply and demand took its hold on the market and created rents that exceeded the cost of owning.  Furthermore, according to Trulia’s winter 2012 rent vs. buy index you’d be spending 15 – 20 percent more to rent in some regions.

 Value Opportunity

Diminishing home prices and low interest rates pose an ideal opportunity to purchase a home.  Adding to the value advantage, veteran and military borrowers who are eligible for the VA Home Loan Guarantee Program allows for 100% financing and no private mortgage insurance (PMI). With historically low interest rates the veteran can forgo the down payment requirements that many other loan products require for a low cost of interest. Further, there are three excellent facets of VA loans posed to the veteran borrower that we discuss below.

VA Loan Advantages

First, it’s easier to meet the requirements of VA loans than many other mortgage types. Upfront credit qualifying standards for VA loans assist lenders to point out whether a borrower is eligible early in the process. Normally, if your credit is above 620 you meet lender program eligibility.  Borrowers can have up to a 40 percent debt-to-income (DTI) ratio according to VA guidelines. The VA offers lenders with a practical residual earnings table with the precise amount in which borrowers still have after usual monthly expenditures to pay for their mortgage. Furthermore, lenders typically will have a more flexible credit qualification when it comes to VA Loans provided that the borrower has demonstrated that they have the ability to pay the loan.

Second, as mentioned above there is no down payment requirement for a VA loan with a lending limit up to $417,000 in most counties.   In some high cost areas the corresponding loan limit can be higher than $417,000. For example, a qualified borrower may acquire a home in Orange County, California for up to $621, 000 without any down payments. Most loan programs require 3.5 to 20 percent for a down payment but because the VA Loan is guaranteed by the United States Department of Veterans Affairs, this removes risk from the lender therefore not requiring a down payment.

Third, you have the option of  funding energy efficient upgrades into your VA loan for up to $6,000 provided that the cost of the improvements reduce your monthly utilities bills more than the increase to your mortgage.

If you want to know more about the advantages of acquiring a house with VA loan, you can get in touch with VA Loan Captain to receive a no cost or obligation consultation.

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VA Loan Captain, Inc. is a service disabled veteran owned small business registered in the state of New Jersey. VALoanCaptain.com® is a diversified housing, benefits, education, and services platform assisting current and former servicemembers to receive the information, value, and services that they deserve. VALoanCaptain.com® has partnerships with veteran focused non-profits and charities that provide services to veterans but is not affiliated with the VA or any government agency.

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