With the housing market in northern Illinois fluctuating in 2018, now is the perfect time for veterans to research the benefits of our VA housing loans. The VA home loan program was created in 1944 as a way to thank our troops returning home from WWII. VA Home Loans are provided by private lenders, such as mortgage companies and banks, and the VA guarantees a portion of the loan for veterans, enabling the lender to provide more favorable terms for the loan.
So what are the benefits associated with the VA housing loans? Below are just some of the ways the VA and lenders like McHenry Savings Banks show their appreciation for veterans.
- No monthly mortgage insurance.
- One of the considerable hurdles for first-time homeowners is worrying about the down payment. With a VA housing loan, there’s no down payment.
- Limitation on buyer's closing costs. Sellers can pay all of a buyer’s loan-related closing costs and up to 4 percent in concessions.
- Since the VA guarantees a portion of every VA loan, financial institutions can offer lower interest rates to VA borrowers that are typically 0.5 to 1 percent lower than conventional interest rates. Rates are based on the inherent risk assumed by the lender to finance the loan. On a 30-year $250,000 loan, the difference between paying a 4 percent and 4.75 percent rate can mean approximately $40,000 in savings over the life of the loan.
- Because homeowners are able to save a considerable amount of money paying off their loans early, prepayment penalties were created to protect lenders and investors from the financial loss of losing years and years of interest payments on issued loans. Fortunately for VA borrowers, there are no prepayment penalties to worry about—you can pay off your VA loan early with no fear of getting penalized. This is a huge benefit and makes VA loans so desirable.
- No credit score apprehension. Veterans don’t need anything near perfect credit to secure home financing at competitive interest rates despite the relaxed credit score requirements. VA loans are also more forgiving when it comes to bouncing back after a bankruptcy, foreclosure or short sale.
McHenry Savings Bank has been serving the banking needs of the residents of McHenry County since 1955. We encourage veterans to research VA loans and visit one of our local branches where we can further explain the process. This Veterans Day, Give McHenry Savings Bank a call at (815) 385-3000 or visit our website to learn more about our VA loans.