| 1. VA loans allow veterans to borrow 100% of the | | | | Conventional mortgage guidelines require the borrower |
| funds needed to purchase or refinance a home. In the | | | | to have anywhere from two to six times their |
| current state of our economy, these types of | | | | mortgage payment in the bank as reserves. Most |
| guidelines do not exist for conventional borrowers no | | | | people's bank accounts fluctuate each month and |
| matter how good their credit is. | | | | given the current state of the economy, this too allows |
| 2. The VA guarantees a portion of the loan and does | | | | more veterans to qualify for homes. |
| not require veterans to pay for monthly mortgage | | | | 6. VA closing costs are usually lower than conventional |
| insurance. Mortgage insurance is required if less than a | | | | financing costs because there are no "junk fees" |
| 20% down payment is used with conventional | | | | allowed per the VA guidelines. This should be the rule |
| financing. Mortgage insurance can cost a anywhere | | | | on all types of financing. Unfortunately, there are many |
| from a hundred to several hundred dollars a month. | | | | mortgage companies out there who charge all kinds of |
| Avoiding mortgage insurance is a huge advantage to | | | | ridiculous fees. |
| the VA loan. | | | | 7. One would think that with all these benefits there |
| 3. VA financing will allow the seller to pay all of your | | | | has to be a catch. Perhaps there is a higher rate? |
| closing costs, including pre-paid items, meaning taxes, | | | | Absolutely not. Even with no down payment, the VA |
| home owners insurance and any interest due from the | | | | home loan rates are comparable and usually lower |
| day you purchase through the end of the month. | | | | than conventional mortgage rates. When a low rate is |
| 4. The income and credit score guidelines for VA | | | | combined with no money down, no monthly mortgage |
| financing are more flexible and allow for higher | | | | insurance, it is extremely hard to compete with. Being a |
| debt-to-income ratios compared to conventional | | | | veteran myself, I was always told that getting a VA |
| financing. Higher ratios allow more veterans to qualify | | | | loan was a hassle and that there was not much of a |
| for the homes that they want. | | | | benefit. Nothing could be further from reality. I wish I |
| 5. The VA has no cash reserve requirements. This | | | | had known the truth about VA loans when I bought |
| means that a veteran may purchase or refinance a | | | | my first house. |
| home without having any reserve cash in the bank. | | | | |