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Getting a VA loan isn’t the same as getting free money. It is mortgage for your house, which means your house may be repossessed and you may walk away from the deal with far less money than you started. Before you continue, use a VA Loan Calculator and WhatsMyPayment to figure out if you can afford the payments. If you are pretty sure you can handle the extra costs of owning your house while paying it off, then here are five things that a VA loan could do for you.
1 – Get on the Housing Ladder Without a Deposit
There are some who say that a VA loan comes with better interest rates, but this is rarely true. There are some that say a VA loan makes it super easy to get a house as a first-time buyer. This, again, is kinda true. In truth, the biggest benefit that most VA lenders are allowed to offer is a loan without a deposit. You can borrow up to a certain allowance without having to pay any deposit at all. After that point, you can still borrow more, but you have to start paying a deposit on the extra amounts that you borrow.
2 – Improve The House You Buy
You can apply for a VA loan that both pays for the building and pays for improvements on the house. There are limits to how much you can do, but VA loans are not just built for people buying houses alone. If you need the roof fixing up or need to make the place more energy efficient, then you may be able to apply for a loan that covers the cost of the house and the cost of the repairs. This is good news if you are looking for a fixer-upper to eventually flip for a profit.
3 – Buy a House If You Have Not-Great Credit
VA loans are built to be a little more accommodating of people in the military who have a less-than-perfect credit score. The idea is that people in the military don’t have the credit-building opportunities that civilians have, so VA loans are a little more forgiving when people have little credit history or not-great credit scores. Where commercial banks may turn you down outright, the VA lenders are more likely to give you a chance. Some will offer a fair deal (within reason) and some will offer higher interest rates. Either way, you are less likely to be turned away by a VA lender than by a High Street bank.
4 – Make an Offer on a Building Quickly
If you are pre-approved for a VA loan, then this is often all the evidence an estate agent needs in order to accept your offer on a house. There is also the benefit that you don’t pay a deposit. For example, if you wanted a house that you had seen, but you didn’t have the deposit, then you would have to wait to save up the deposit and then buy. With a VA loan, you simply get pre-approved and then make an offer. To put it another way, if you are in the military and one day you wake up and want to buy a house, even though you have no money in the bank, a VA loan gets you closer than if you started applying for mortgages with regular banks.
5 – Dramatically Improve Your Credit
As mentioned earlier, a VA loan may still be available to you even if you have okay/not-great credit. After you get the housing loan and you start paying off your loan efficiently, you will see your credit rating start to improve. As you slowly pay off your house, you are viewed as somebody who both pays off debts well and who has a house. You may not be able to put your house up as security (or maybe you can), but it shows that you are growing your wealth in a manner that isn’t taxing your pants off.
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