The VA has been helping service members, Millennial’s, Veterans, and eligible surviving spouses to become homeowners. House related programs and home loan guarantees are some of many ways using a VA Loan helps. According to the Veteran United, millennial veterans and military members are taking advantage of the VA loan program. It was reported that 700,000-plus loans went toward ensuring home ownership to these veterans. That’s double what the agency’s total was five years ago. The program last year (2017), also saw its biggest year in history in terms of loans given out.
These government-backed mortgages have young buyers taking advantage of the lower interest rates, lower monthly payments, and no private mortgage insurance. Last year, millennial’s accounted for a third of all VA loans, according to the Veterans Affairs. This is beneficial considering how millennial’s typically have dinged credit or very little to no savings. Not to mention, there being a $0 down payment loan program is always helpful.
Here is a summary of the three reasons, highlighted by this article, from realtor.com.
No Down Payment is Key for Younger Buyers
Rather than spending years just to save up for a down payment the VA loan benefit alleviates you of that stress and works with the qualified buyer’s affordability. The average VA loan was $253,000 last year. For that amount, typically, a conventional loan would require a down payment of at least $12,000. FHA loan require 3.5% down.
No Mortgage Insurance
VA buyers also don’t have to pay extra for mortgage insurance monthly. That is a common feature for low down-payment loans. Typically, conventional buyers have to pay for a private mortgage insurance unless they can put 20% down. FHA loans come with upfront and annual mortgage insurance premiums.
Most VA buyers encounter a funding fee that goes straight to the Department of Veterans Affairs. Veterans and military members can finance this cost over the life of their loan. Borrowers who receive compensation for a service-connected disability don’t pay it at all.
Flexible credit guidelines
VA loans were created to boost access to home-ownership for veteran and military families. Lenders typically have lower credit score benchmarks for VA loans than for conventional mortgages. The average FICO score on a VA purchase last year was 50 points lower than the average conventional score, according to Ellie Mae. VA loans have the lowest foreclosure rate on the market for the past nine years. There are loan programs the advocate on behalf of veteran homeowners.
“VA is even there to assist veterans who encounter difficulty making payments,” London said. “Last year, VA and services helped over 97,000 veterans avoid foreclosure. Using the VA program is a win for veterans, lenders, and taxpayers.”
More than seven decades after their introduction, VA loans are still making a big difference for veterans, military members, and their families.