Thursday, November 16, 2017

Veteran Assistance Loans - How Do They Work?

With so much positive growth expected in the housing market during 2017 and expected into 2018 and further, many veterans are researching the  benefits of VA housing loans.  

The VA home loan program was created in 1944,  VA Home Loans are provided by private lenders, such as banks and mortgage companies. VA guarantees a portion of the loan, enabling the lender to provide you with more favorable terms.
VA Housing Loans

Here are many of the benefits when taking advantage of the VA housing loans.  
  • No down payment.
  • No monthly mortgage insurance.
  • 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.
  • Lower interest rates. 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 inherit 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.
  • No prepayment penalties.   Because many  people realize how much money they can save by paying off their loan early, but are often forced to pay prepayment penalties if they wish to do so. 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, you can pay off your VA loan early with no fear of getting hit with any prepayment penalty.  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. Call us (815) 385-3000 NMLS#630527.