If you have been an active member of the US military for a certain period, you may avail the benefits of VA loan. Partially backed by the Department of Veterans Affairs, the mortgage is widely known for various advantages. Among many, the perk of requesting the mortgage with low credit score is an important key. Also, the mortgage does not require down payment; however, people acknowledge the importance of having it. In order to find a convenient solution, you should understand whether the down payment is essential or not.
There is a set of eligibility requirements needed to pass for VA home loan credit score 550 in Houston, TX. Have you served the country for 90 consecutive days during the war? Or, have you been a regular member of the National Guard for more than 6 months? Or, are you the spouse of a military member who passed away while service? If these scenarios seem familiar, you are eligible for the VA mortgage. Now, choosing an unusual path, you can land various advantages. To utilize the benefits like a pro, read the article further.
Lack of Down Payment in VA Home Loan
Differing from traditional loans, VA home loans do not require money down for qualified borrowers. Additionally, there is no private mortgage insurance imposed either. Therefore, the borrowers can be flexible in the initial years of the mortgage. Generally, 90% of borrowers opt for the loan with 0% down payment. However, the professionals indicate that the minimum 5% of a down payment can be a bonus for the customers.
Pay a Low Funding Fee for VA
It does not matter whether you are going to make a down payment or not, the funding fee is inevitable to miss. Now, the funding has breakpoints and it may be lowered at greater than 10% down level or 5% down a level. So, a customer can notice the VA funding fee goes down from 2.15% to 1.50% if there is a down payment of 5%. If the down payment is 10% or more than that, the funding fee might come down to 1.25%.
Get an Instant Equity in Home via VA
If there is no down payment at the start, there is no equity in the home. When the property value sinks, the customer enters a critical situation. At this time, the market value is lower than you expect. So, the customer cannot make adequate amount on the sale of present house for buying another. If you have already built value in the home, you are offered multiple financial options. There may be an opportunity to save big on the final budget at the time of huge home improvements or repairs.
Another benefit is that the down payment can reduce the monthly payment amount. So, you will pay a minimum amount of interest. The down payment plays a large role in this competitive market. Hence, get in touch with a professional lender who can help you if there are queries regarding down payment or interest rate.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.