Many military veterans apply for a VA loan when looking to purchase a house. In most cases, these particular loans offer favorable terms for the applicant, which is the reason that close to 80% of veterans own their own home. However, there may be certain instances when a VA loan may not be an appropriate option. What are some instances when an individual should look into other loan programs?
You Have Money for a Down Payment
Many people use VA loans because they can offer loans for homes without requiring down payment or mortgage insurance. In most instances, loan options through banks will require you to put some money down. However, what happens if you have the 20% to put down on a home?
In many cases, you may find more favorable options if you look elsewhere. VA loans normally have a fee, which is charged to each loan. If you are able to put down 20%, you may be able to avoid such fees. Typically, the fee can range from 2% to 2.2% depending on a certain set of criteria.
You Have Excellent Credit
If you have great credit, then many outside loan programs may be able to offer more favorable terms. Most VA loans allow for lower credit scores and also a higher debt to income ratio. If you have wonderful credit and limited debt, then you may want to explore a conventional loan.
You Are Looking to Purchase a More Expensive Home
In most cases, VA loan programs allow applicants to borrow up to $417,000 without putting any money down. However, many people look to purchase a home that is more expensive, especially if they live in an area with a higher standard of living. In this case, a conventional loan may be your only option.
Avoiding the Red Tape
If an applicant applies for a VA loan, then he or she should be prepared for some red tape. Some applicants have found that the VA loan office can be very meticulous when it comes to home inspections and appraisals. They may require the seller to make some repairs before the house can be sold. This can drag out the process and can ultimately lead to the loan being denied or the seller not accepting your offer to purchase.
Purchasing a Fixer Upper
In most cases, a house purchased with a VA loan must be move-in ready. If you have found a house that is very affordable but requires some repairs, then you may want to look elsewhere to find a loan. Remember that VA loans must pass a stringent inspection process, which may mean that you may not be able to purchase certain types of property.
If You Have Another VA Loan
Remember that if you have a current VA loan, you cannot apply for another until the first one is paid off. If you find another piece of property, you may want to apply for a conventional loan instead.
Ultimately, if you are looking to purchase a home, you should investigate all of your options thoroughly. Even if you are a veteran, you may find that a VA loan may not be your best option. Consult a loan officer and research all the programs out there and you may find something with more favorable terms and conditions.
Mortgage Originator Jimmy Vercellino, specializing in VA loans, helps veterans use their VA loan benefit to their greatest advantage. For more details call us at 619-350-1951 or visit our site http://sandiego.valoansforvets.com/
The views expressed here are those of the individual author and do not necessarily represent those of First Choice Bank (NMLS #: 177877) and First Choice Loan Services Inc. (NMLS #: 210764), 959 South Coast Drive, Costa Mesa, CA 92626. Equal Housing Lender. www.fcloans.com/disclaimer/