There are many different veteran assistance programs that are designed to help people who have devoted part of their life to the military. There are programs that can help veterans pay for life essentials, college costs, and more. One very valuable program is the mortgage program through the Department of Veteran's Affairs (VA).
If you're looking for assistance for veterans and you're ready to buy a home, here are the top four reasons you should look into a VA mortgage.
No down payment.
The VA mortgage is essentially the only mortgage that allows people to buy a home without paying a down payment. Many conventional mortgages require you to pay up to a 20% down payment. On a modest $250,000 home, that means paying $50,000 upfront.
Even the FHA program, which is designed to help working people buy homes, requires a 3.5% down payment. On a $250,000 home, that would be $8,750.
Lower monthly payment.
Most VA mortgages have a lower monthly payment than you'd see if you borrowed the same amount of money through a different type of mortgage program. This happens because the VA loans have lower interest rates.
Here's a quick example. Imagine you borrow $100,000 at 3% interest. Over 30 years, your monthly payment will be $421.60. In contrast, if you borrow the same amount at a 5% interest rate, your monthly payment climbs to $536.82.
That extra $115 per month is all due to the interest! As you borrow more money, the difference becomes even more dramatic.
Fixed monthly payments.
VA mortgages are typically 30-year fixed-rate mortgages. Fixed means that the interest rate doesn't change. As a result, your monthly payment stays the same for the life of the loan.
If you continued to rent, your rent would likely go up every year to keep pace with inflation. When you use this veteran assistance program, you can avoid unexpected changes in your monthly living expenses.
No prime mortgage insurance.
Prime mortgage insurance is insurance that protects lenders. If someone has prime mortgage insurance and they quit paying their mortgage, the insurance ensures that their lender doesn't lose any money.
Most mortgage lenders require you to pay for prime mortgage insurance if you have less than 20% equity in the property. Typically, the payment is based on the total amount you have borrowed, and it increases your monthly payment.
Here's the good news — you don't have to pay prime mortgage insurance if you get a VA loan. This is another factor that keeps your monthly payment down. Contact a place like Veterans Advocacy Associates for more information.
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