5 Big Benefits of Using a VA Loan to Buy a Home for Sale in Knoxville

If you’re like many people who have served in the U.S. Armed Forces – the Army, Navy, Marine Corps, Air Force or U.S. Coast Guard – you qualify for a VA loan. This benefit can create a straightforward path to home ownership for you, and if you qualify, it makes sense to use yours.

5 Big Benefits of Using a VA Loan to Buy a Home for Sale in Knoxville

There are five substantial benefits of using a VA loan to buy a home for sale in Knoxville:

No down payment
Favorable interest rates and loan terms
Limited closing costs
No prepayment penalty
No private mortgage insurance requirement

Here’s a closer look at each.

VA Loan Benefit #1: No Down Payment Necessary

When you use a VA loan, you don’t have to put any money down. Contrast that to a standard mortgage, which typically requires a buyer to put down 20 percent of a home’s purchase price, and that’s a huge amount of money that you don’t have to save. For example, if you want to buy a $300,000 home, you’d ordinarily have to come up with a $60,000 down payment – but with a VA loan, you can buy a house with nothing down. (There are a handful of fees you may have to pay up-front, though.)

VA Loan Benefit #2: Favorable Interest Rates and Loan Terms

Because the Department of Veterans Affairs guarantees these loans (at least up to a certain amount, which is subject to change), lenders are willing to give veterans who use them more favorable terms and interest rates than they’d otherwise qualify for. Think of it this way: Your lender will be more comfortable knowing that it’s protected if you default on your payments, so it’ll gauge your loan based on the fact that it’s guaranteed not to lose all its money.

VA Loan Benefit #3: Limited Closing Costs

The VA limits the amount of money that lenders are allowed to charge you for closing costs. And even better, the seller of the home you buy can pay some or all of your closing costs. That means less money out of your pocket. Additionally, in many cases, you can roll your closing costs into your VA loan. That means you pay for them with your monthly mortgage payments rather than up-front, like most people do.

VA Loan Benefit #4: No Prepayment Penalty

The VA’s rules require lenders to let you pay off your mortgage early if you want to – and your lender cannot charge you a prepayment penalty if you do. Technically, you could pay off your VA loan ten minutes after you sign your contract without paying a fee for doing so.

VA Loan Benefit #5: No Private Mortgage Insurance Requirement

Most lenders require you to pay for private mortgage insurance, or PMI, if you don’t put up a 20 percent down payment to buy a home. However, the VA prohibits lenders from making you buy PMI – even if you don’t have a down payment at all. PMI protects the lender, not you, but since the VA is guaranteeing some or all of your loan, it’s not necessary for you to spend your hard-earned cash on this insurance.

Are You Buying a Home in Knoxville?

If you’re ready to buy a home in Knoxville, I’ll help you find one that’s perfect for your needs. Call me at 865-368-5150 now and let’s talk.

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5 Big Benefits of Using a VA Loan to Buy a Home for Sale in Knoxville