| No Down Payment |
- Since VA guarantees a portion of the loan, no down payment is required.
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| No Mortgage Insurance Premiums |
- Private mortgage insurance is not required because VA provides a guaranty for a portion of the loan. This allows veterans to obtain their home with no down payment.
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| Negotiable Interest Rate |
- The interest rate on VA loans can be negotiated based on prevailing rates in the mortgage market. If you choose a fixed rate mortgage, the interest rate will stay the same for the life of the loan. With an adjustable rate mortgage, the interest rate will be fixed for a specific time frame and will then adjust according to the mortgage market. However, if interest rates go down you may apply for a new VA loan to refinance your loan at a lower interest rate, without using any additional entitlement.
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| Limitations on Closing Costs |
- The cost of obtaining any mortgage can be quite high. VA regulates those closing costs that a veteran may be charged in connection with closing a VA loan. No commission or brokerage fees may be charged to you for obtaining a VA loan. However, you may pay reasonable closing costs to the lender in connection with a VA guaranteed loan.
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| Refinancing Options |
- VA offers three different options when it comes to refinancing.
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| Loans are Assumable |
A VA loan may be assumuble if the person assuming the loan qualifies based on credit and income. Your loan may be assumed by both veterans and non-veterans.
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Q: When a veteran sells the property to someone who will assume the existing VA loan, is the veteran released automatically from personal liability for the repayment of that loan?
A: No. If the loan was closed after March 1, 1988, the lender or VA must be notified and requested to approve the assumer and grant the veteran release from liability. If the loan was closed prior to March 1, 1988, the loan may be assumed without approval from VA or the lender. However, the veteran is strongly encouraged to request a release of liability from VA in order to avoid owing a debt to the Government if the loan assumer (or a subsequent assumer) fails to pay the loan.
Q: If a veteran obtains a release of liability, is restoration of entitlement automatic?
A: No. the veteran's entitlement will only be restored if the individual assumming the loan is a veteran with sufficient entitlement to substitute. The veteran must also meet occupancy requirements.
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| Right to Pre-pay Without Penalty |
| At any time, you have the right to pre-pay any portion/amount of your loan balance without penalty. However, payments received after the 15th day of each month are subject to a maximum penalty of 4% of your normal monthly mortgage payment.
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| Varied Repayment Terms |
| VA will guarantee loans to purchase homes made with the following repayment plans
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| VA Assistance |
| Should financial problems arise making it difficult to meet your monthly mortgage obligation, VA assistance is available to help you work with your mortgage company to retain ownership of your home and avoid foreclosure. |
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