When purchasing a home, all buyers (including VA) should budget for 2-3 % of their purchase price for closing costs. Wait a sec.....So what about all this $0 down talk?
Yes $0 is what's being collected for the down payment of your home, but closing costs still have to be considered. So for borrowers that qualify they are given the option for lender credits that can be applied to closing costs.
The lenders we work with give options to effectively choose your own interest rate & lender credits combination.
Option 1: The lowest rate, the best payment, higher costs
The lowest rate would offer little to no lender credits, so you would need to pay your own closing costs in full. This is a great option for those that are planning on keeping their loan for many years and want the best payment for the long term.
Option 2: Higher rate, highest payment, lowest costs
If you choose a higher the rate, you could receive enough in lender credits to cover ALL costs. In this scenario your payment will increase - but then your total out of pocket expenses could effectively be $0. And that's a lot of money saved up front!
Option 3:Split the difference
Maybe you don't want the highest rate but you still want to reduce your costs, maybe you want to split the difference. Ye, that's available too. An affordable interest rate, with a comfortable payment and lower costs. This may be exactly what you're looking for.
Everyone's situation is different, and we've got plenty of options - so let's talk about what works best for you!
Interest rates are always based on risk. If the borrower puts down more money, has a high credit score, plenty of liquid reserves or has a very low debt-to income ratio - the lender gives more favorable rates and terms.
So what about someone putting down $0, less-than perfect credit, or has little to no reserves? Not to worry! Because the VA backs each VA Loan with a guaranty, financial institutions carry less risk and can offer interest rates that are typically 0.5 to 1 percent lower than conventional interest rates.
Pair that lower interest rate with the ability to purchase a home with no money down and no private mortgage insurance and the savings start adding up significantly.
Lower Interest = More Savings: It's simple math.
Sometimes saving money and building credit can be difficult - especially for service members on the move. With the VA Loan, qualified borrowers can finance 100 percent of the home's value. Look at the chart below to see how much you can save through the no-money-down benefit of the VA Loan.
VA Loan Savings at Closing:
Loan Amount 0% Down 5% Down 10% Down
$300,000 $0 $15,000 $30,000
$400,000 $0 $20,000 $40,000
$500,000 $0 $25,000 $50,000
$600,000 $0 $30,000 $60,000
Looking for an exact savings quote? Speak with Dan today » 661-803-9046 or DanFelico@gmail.com
You want to buy a little more home? With VA it's possible.
Most loan programs are very conservative when it comes to debt-to-income ratios. But things are different with the VA. With compensating factors I have seen the VA approve a debt to income ratio up to 60%! That's what I call stretching your dollar. Now, of course not everyone likes to live on the edge, but just knowing it is available for those that need it - now that's flexibility.
Credit less than perfect? With VA it's possible.
Most loan programs require a minimum credit score of 620. But here again is where the VA comes out ahead. Borrowers with credit scores as low as 580 can still qualify for VA financing!
The VA guidelines are also much more lenient with credit dings & late payments etc. So if your credit is less than perfect, don't assume you can't own a home or refinance what you've got. There are plenty of options available! So let's talk about your specific scenario.
It's been said that The VA Loan program is "The most powerful home loan program on the market". It is available for many veterans, service members and military families.
These flexible, government-backed loans come with some really significant benefits. The VA home loan has opened the doors for many veterans who might otherwise struggle to obtain traditional financing.
VA loans require no down payment or private mortgage insurance (PMI). They feature some of best rates and terms in the industry and allow qualified veterans to purchase a home with little to no money out of pocket. (Ask me about the $0 out of pocket)
This amazing loan program offers the following benefits:
Many conventional & FHA lenders require borrowers to pay private monthly mortgage insurance unless they're able to put down at least 20 percent, which can be a tough task for some people. Private mortgage insurance (PMI) is an insurance that protects lenders in case of a borrower default.
With a VA Loan, however, there is no PMI. This is because the federal government backs all VA Loans and assumes the risk on behalf of the borrower that is typically covered by the PMI.
This VA Loan advantage allows you to build more and more equity in your house, effectively saving you thousands of dollars over the life of your mortgage.
PMI Savings per Month:
Loan Amount Monthly Savings Example:
$150,000 Save $115/mo
$250,000 Save $191/mo
$350,000 Save $268/mo
$450,000 Save $345/mo
Get rid of PMI: Start your VA Loan quote online