Veterans Affairs loans is an excellent deal for many veterans and military members. An applicant could be eligible for a VA loan program without having to satisfy stringent application requirements or pay high-percentage down payment, in contrast with conventional mortgages.
According to Utah-based mortgage company Primary Residential Mortgage, Inc., VA loan programs have helped over 20 million families across the United States. Borrowers typically enjoy low closing costs and low mortgage payments, among other benefits.
Despite the advantage, some individuals qualified for the loan program still think twice about applying because of the funding fee. Here are some of the things you need to know about it:
What Exactly is the VA Funding Fee?
It is a one-time, upfront fee you pay to the Veterans Affairs to secure your loan. This fee would be used to cover potential losses in case borrowers fail to pay up or default on their loans.
How Much Do I Have to Pay?
The funding fee is not the same for all borrowers and may range from 1.25% to 3.3% of your loan’s overall amount. It will be based on factors such as the size of the loan, your military category, your down payment (if applicable), and whether you have an existing VA mortgage or not.
Do I Really Have to Pay?
Majority of veterans and active duty servicemen have to pay the funding fee, as well as National Guard members and Reservists.
Can I NOT Pay?
The VA funding fee might be waived if you suffer from a service-related disability. There are also specific situations under which you could be exempted from paying, such as:
• If you are a veteran who is entitled to compensation for a disability you developed from military duty and have not yet received active duty or retirement pay.
• If you are a surviving spouse of a veteran who passed away in service or due to a service-related illness or disability.
Spending more money for the VA loan program could understandably make some wary of applying. However, the expense is well worth it for ensuring a helping hand for your family as they make their way to achieving their dreams.