By Elizabeth Colegrove
My husband and I own eight rental properties and counting. Thanks to our rental empire, I have been able to create a portable career, work anywhere, and have the kind of flexibility I have always dreamed of. None of this would have been possible if we hadn’t have bought our first home with the VA Home Loan.
1. Lower interest rate
The VA Loan has the lowest interest rate available. While you will need to check with a local mortgage broker, in my experience there has been about a .5 to 1% difference between the VA Loan and other mortgages. With interest rates rising, this is a huge benefit to those buying their dream home– especially if it an expensive house.
2. 0% down
Our first house we bought was a foreclosure and needed $15,000 worth of work. We had saved up a 15% down payment needed for a conventional loan. Because we bought with the VA Loan, we were able to get a house that now had over 25% equity. That’s something we could never had done if we were doing both the down payment and the upgrades.
3. No PMI
While the VA Loan has a funding fee, it does not have Private Mortgage Insurance (PMI). This is great because it saves you hundreds of dollars every month.
4. Funding Fee waived with those with a VA disability
If your veteran has a 10% or higher VA disability rating, your funding fee is entirely waived.
5. Stricter appraisal
Many people think this is a negative as it can make finding your dream house in a challenging market harder. Personally, I love the extra protection. As a beginner, you make every mistake possible, so having one more person looking out for your welfare is an amazing asset. While it might mean you lose a house or two, it also means you are less likely to get yourself into a situation that you regret for a long time.
6. Ability to use the VA Loan multiple times
We have used the VA Loan twice and are working on using it for a third time. The ability to use it at multiple duty stations is a great asset.
7. Funding fee is reduced with down payment
If you want to take advantage of the lower interest rate but don’t want to pay higher fees, put a down payment on your loan to lower the cost even more.
At the end of the day remember, buying a house is a 30-year commitment on a 30-year mortgage. Never buy just for the sake of buying. Make sure you buy in an area that has an exit plan. We personally only buy houses when that mortgage is $200-$300 under rent value. This has allowed us to rent out our house. Don’t force the decision. If it does not make sense, wait.