When Is The Best Time To Get A VA Home Loan?

When Is The Best Time To Get A VA Home Loan?

When shopping around for a mortgage, many people wonder if there is a "good time" to apply. For some mortgage products, there is no doubt that key market conditions affect how much they're going to pay. However, there is no tried and true advice for when you should - or shouldn't - apply for a VA home loan. The things that affect the interest rates that are attached to the typical VA home loan are so varied and complex that there is no hard and fast rule to refer to.

If you are considering a VA home loan, contact a number of qualified lenders and ask them what the current rate is. Try to get a feel for whether rates have recently crept up or gone down, and act accordingly. Either way, you're going to be paying a lot less than those who don't qualify for VA loans are going to. Also, without the worry of private mortgage insurance and without having to make a down payment, you're going to be ahead of the game financially anyway. In fact, the relaxed conditions for VA home loans makes any time a good time to get one.

The Disadvantages Of VA Home Loans

You'd be hard pressed to find a whole lot of drawbacks to a VA home loan. Assuming you qualify - i.e., that you are an active member of the United States military, or a veteran - then you will quickly see that the pros of such a loan far outweigh the few cons. Still, in order to make the best and most educated decision possible, you should learn about the drawbacks and disadvantages of VA loans. Knowing exactly what you're getting yourself into is always a good idea. In general, the main drawbacks of a VA loan are:

Loan Limits

Although they vary depending on where you live in the country, there are limits on how large of a VA home loan you can take out. Those who are looking to purchase a very expensive home, for instance, may be discouraged by the loan limits that are imposed by the VA home loan program. If the home that you want to buy exceeds the loan limits set by the VA home loan program, you will have to finance the balance through another mortgage program. This can seriously negate the benefits of using the VA home loan program. Still, the limit in most areas is currently $729,000; for the vast majority of people, that amount is more than enough for what they are looking at.

Hidden Fees

One of the biggest worries that prospective home buyers have is paying hidden fees. When figuring out how much you can afford, you need to make sure that you take every single fee and expense into account. Many mortgage programs and home loan products have hidden fees; on the outset, they aren't very obvious. By the time everything is said and done, though, they can increase a borrower's expenses by a considerable margin.

VA home loans are interesting because they don't include a ton of different hidden fees. Still, there are a few that you need to be aware of in order to get the best idea possible about what you can really afford. These fees include:

  • Repairs - When applying for a VA home loan, the VA has its own inspection and assessment done on the property that you'd like to purchase. In order to qualify, the property must fit within the specific criteria as outlined by the VA. Although it's not terribly common, occasionally the VA requires repairs and other work to be performed before it will approve a loan. The seller is not allowed to make the repairs; it is solely the responsibility of the buyer. In this way, you could incur some extra expenses when trying to secure a VA home loan. For the most part, such expenses are minimal.

 

  • Closing Costs - There are certain fees and expenses that the seller cannot pay when a VA home loan is being used to purchase a house. For instance, courier fees and document recording costs are generally the responsibility of the buyer. Although they aren't usually terribly expensive, they should still be taken into consideration when calculating how much you can afford to spend. Also, miscellaneous VA loan fees are going to be your responsibility, as is the cost of termite inspections - if they are required.

 

  • Funding Fees - Down payments are not required for VA home loans. However, if you make a down payment of at least 5% of the purchase price, you can avoid funding fees. Funding fees are required by law for VA home loans. For those who make no down payment whatsoever, the funding fee is going to be around 2.15%. It should be noted, though, that this fee is rolled into the overall loan and isn't due upfront. In certain cases, funding fees may be waived. Veterans who are receiving VA compensation for service-related disabilities, for instance, may not have to pay these fees. However, you should plan on paying them and should include them in your calculations when planning to purchase a home through the VA home loan program.