Is VA Loans With Zero Down Payments A Good Choice?

Warning: Undefined variable $custom_content in /home4/comcompare/public_html/mortgagenews/wp-content/plugins/code-snippets/php/snippet-ops.php(582) : eval()'d code on line 10
Amanda Byford
Follow Me

Those who serve in the US military are likely to make sacrifices. For some people, this means constantly moving their families and getting involved in the process. For others, it means eliminating higher wages.

As such, it is a good idea to have a credit program for Veterans Affairs (VA). VA lenders can get mortgage lenders without money. 

Most other loan programs require some down payment, so VA loans are a good choice for applicants who can pay their monthly housing costs but don’t have much of an opportunity to save.

But even if the possibility of avoiding a down payment seems like a good thing, there is a risk to going this route. So if you are considering taking a VA loan to buy a house, you can keep these points in mind.

Mixed bag

VA loans offer home buyers much more flexibility than regular loans. But not having to make money on a down payment may not be a good thing that comes to mind. First, the less money you buy at home, the more debt you take on. 

And that doesn’t just mean the trouble of higher monthly payments, but spending a lot of money on interest when paying off your home.

This is especially true today. Although VA lenders are likely to offer competitive interest rates, lending rates are generally high today. 

When you take out a larger loan, it means that you pay more interest on the loan and you can use that money for other purposes. 

The less money you invest when buying a house, the less equity you have in the property. Equity is measured as the value of your home minus the balance of your debt.

Having a small capital can be especially problematic these days because home prices are high.

If these prices fall in the next few years (which is probably due to how high they are at the moment) and you know you have to sell your house by the time the market value drops, you can get underwater. your fault.  

This means that you may not be able to sell your house for enough money to repay the entire amount to the creditor.

Let’s say you bought a house for $ 400,000 this month without money. You may have to sell it for two years. 

But if your house costs only $ 350,000 at the moment, you may have trouble. Even if you have eliminated part of your main debt in the past, you can still largely fall underwater.

Be careful when obtaining a VA loan

If you are in a good financial position but do not have the money to live, a VA loan can be attractive if you are entitled to it. 

But before you rush to a VA loan, consider the disadvantages of buying free housing. 

And to be clear, you can take out a VA loan completely and make a down payment. So don’t think that if you want to make some money, you have to look for another type of loan.

Mortgage interest rates are growing – and fast. But they are still a little below historical standards. 

So if you want to take advantage of interest rates before they go high, you will want to find a lender to help you get the best possible rate.

Reference Source: The Ascent

Leave a Reply