Posted on: 27 July 2017
Being an active military member or veteran comes with some great benefits. One of those benefits is the VA loan. This is not a loan issued by the Department of Veteran's Affairs; you'll get the loan from a regular mortgage lender that's approved by the VA. A VA loan is a loan that's guaranteed by the Department of Veteran's Affairs. It allows you to get a low-interest loan without a down payment or the need to buy mortgage insurance. Take a look at a few things you should know about using your VA loan.
Plan For Upfront Expenses
The ability to buy a home without paying a large down payment is one of the biggest advantages of a VA loan, and you should definitely take advantage of it. However, just because you won't have to make a down payment doesn't mean that you won't need any cash on hand.
You'll probably need to pay for an appraisal, and you'll definitely need to pay for homeowner's insurance. You may also need to put down earnest money to show that you're a serious buyer. Earnest money is a deposit – if the sale goes as planned, it can be applied to your closing costs.
Be Careful With Condos
You can buy a condo with a VA loan, but it needs to be located in a VA-approved development, which can limit your options.
If you find a condo that you want to buy that isn't in a VA-approved development, your lender may be able to help you get the development on the list so that you can buy it, but it's not a sure thing. Even if your development does get added, it's a lengthy process that will add time to your home-buying process. Make sure you allow yourself extra time to find a home and close the deal if you have your heart set on a condo. If you're in a hurry to move, you may have to bypass the condo.
Get a Pre-approval
There are several good reasons to get a pre-approval for a loan before you start home shopping.
- A preapproval lets the seller know you're serious. They'll be more likely to accept your offer than that of someone whose funding might fall through.
- A preapproval also lets the agent know you're committed. Many won't listen to any offer if you don't have a preapproval letter.
- A preapproval gives you a firm idea of how much house you can afford. That way, you won't get attached to a house only to find out it's out of your range.
Knowing the ins and outs of how the VA loan works will make it easier for you to choose a home. With a little planning, you'll soon have the home you've been looking for. For more information, talk to a company like Blue Wave Funding.Share