The VA loan is among the most common benefits used by both veterans and active duty members of the armed forces. The Department of Veteran Affairs has guaranteed over 20 million loans since 1944. The irony is despite its prevalent use, there are still a lot of servicemen who do not have a clear grasp of how it works.
Before talking to a VA loan company such as Primary Residential Mortgage, Inc., it is best that you learn the basic information first.
Not Given by the Department of Veteran Affairs
Contrary to what many people think, the loan does not come from the DVA. The government agency only assures the lender that the DVA will cover part of the loan in case of borrower default. In simple terms, the guarantee is only up to a specific amount.
Not All Properties Are Eligible
Some properties have no coverage under the loan program such as co-ops. A vacant lot, in general, is not qualified, but it is eligible when used with a construction loan. Manufactured or modular homes can qualify if approved by the lender.
Only for Primary Residences
You cannot use the loan to buy an investment property or a vacation home. This is because of the VA’s residency requirements.
No Penalties for Prepayment
You can make extra payments anytime. Thus, you can pay off your loan faster without incurring penalties. This will allow you to save a lot of money in interest over the duration of the loan.
You have to pay for the funding fee. This will help ensure the program’s no down payment and no mortgage insurance features.
Once you have paid off your current loan, you can make use of a new VA loan. There is no limit to the number of times you can utilize the benefit.
These are only some of the basic features you need to know about VA loans. Knowledge of these features will help you manage your loan benefits better.