When the time comes to buy a home, you have to decide which types of mortgages you want to apply for. There are a few different options, and no single mortgage type is suitable for everyone. However, if you are a military service member or veteran, then you probably qualify for a VA loan, a type of mortgage that is backed by the Veterans Association. If you do qualify for this type of mortgage, then it is probably the best mortgage for you. Here is why.
You do not need a down payment
If you want to put a down payment on the home, then you certainly can, but with a VA loan, you do not have to. This means you can save thousands of dollars that you would use as a down payment and use it in other ways, such as to decorate your home, pay for your move, or save for your child's college fund. Most other mortgages require a percentage of the loan as a down payment, which can get expensive. By applying for a VA loan, you do not have to come up with this money for a down payment, which can be a game-changer.
You will not have to pay for private mortgage insurance
With most types of mortgages, you need to pay for private mortgage insurance, or PMI. This policy basically ensures the bank that it will pay the bank if you default on the loan. Costs vary, but most people pay over a hundred dollars a month for PMI. With a VA loan, you do not need to have PMI. The Veterans Association takes care of this for you. If you default on the loan, then they will pay the bank, basically taking the place of a private mortgage insurer.
You will get a better interest rate
Interest rates on mortgages are always fluctuating, and they also vary from bank to bank. However, you can almost always count on a VA loan coming with a better interest rate than a conventional mortgage. Often, the interest rates for VA loans are less, and these savings can really add up over the life of a 30-year mortgage.
Not everyone qualifies for a VA loan, but if you do qualify, it is definitely a perk worth taking advantage of. You will save plenty of money in the long run, especially in the ways that are described above.