VA Loan Benefits

The Benefits of a VA Loan
By Adam Gibson

((Note: We're pleased to post this article by Adam Gibson, a financial writer and consultant. VA Mortgage details on: http://valoans.vamortgagecenter.com))

Buying a new home is an exciting process. A homeowner no longer has to answer to a landlord or live in the unpredictable situation of rental responsibilities. However, with homeownership comes a great financial obligation. One of the biggest questions will be, what can be done to save the most money in this exhilarating process?

If one is a U.S. veteran or an active duty service member, he or she most definitely wants to use the benefits offered through the U.S. Department of Veteran Affairs. Realizing the great sacrifices service men and women have made for their country, the VA secures a loan program for such military members. Because of this, lenders usually approve the VA loan with lower rates than conventional programs. Through the VA loan, military members can take advantage of the many opportunities to save money. How?

VA Loan Benefits
No Money Down—The VA mortgage program is one of the few government-backed loans that require no money down on a new home. Most conventional loans require a 20% down payment. No down payment gives families the opportunity to save up.

No Private Mortgage Insurance (PMI)--With conventional loans, mortgage insurance can cost an extra $100 to $700 per month. Veteran’s families save hundreds of dollars a month from this feature alone.

A Variety of Plans--Not unlike conventional loans, VA loans offer fixed and adjustable rate mortgages (ARM). Having multiple payment options allows a family to choose what’s best for them.

Lower Closing Costs--VA closing costs are usually lower than conventional financing costs. This is because VA guidelines do not allow mortgage companies to charge certain types of added on fees.

Getting Serious
The process for obtaining a new home is no easy one. And with each year, it gets harder. Families need to be financially ready. Credit scores need to be at a decent level. Fix credit errors. People with good credit and a reasonable debt to income ratio will always receive better deals than the next person.

Because buying a home is such a popular and exciting endeavor, many people tend to rush into the process, making huge mistakes. The best way to save money is to take time and read the fine print. Do not let anyone speed up the process.

Other Tips for Saving on Mortgage
Only buy what’s affordable. What is affordable? If one can spare an extra $100 on top of their mortgage payments, then that is a comfortable obligation. Put the extra $100 a month towards the interest on the loan. By doing so, a family can shave five or more years off of their mortgage. Some tricks, be sure to put the $100 in a separate envelope with instructions for it to be applied only to the interest.

A mortgage should not burden a family. Buying a home is a dream come true, so follow all money saving advice and take the process slow and seriously.

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Adam Gibson is an author of Accrued Interest, a popular financial world blog. Check out Accrued Interest for the latest on the bond market, treasuries, mortgages and other financial news