If you’re an honorably discharged veteran of the U.S. Armed Forces or if you’re a current service member – including Guardsmen and reservists – you are eligible to use your VA loan to buy a home in Franklin, Brentwood, Nashville or elsewhere in Tennessee. If you don’t have all the details, here’s what you need to know.
5 Key Points About VA Loans
VA loans are reusable.
You can use your VA entitlement as many times as you’d like, as long as you pay off one loan before opening another. In some cases, you can get a new VA loan if you’ve lost one in foreclosure – so don’t write off the possibility if that’s happened to you.
VA loans are only for primary residences.
You can’t purchase a farm or a “fixer-upper” with a VA loan; you must use the home you purchase as your primary residence for a certain number of years. If you decide to sell your home, VA loans are assumable. That means the buyer can take over the payments as long as he or she also qualifies for a VA loan.
VA loans are guaranteed by the government.
Because VA loans are backed by the government, they give lenders more confidence. That enables you to get better terms than you may get without a VA loan, and it allows you to avoid coming up with a down payment.
VA loans don’t require mortgage insurance.
Most other loan programs require you to buy mortgage insurance, which you pay as a monthly premium, if you aren’t putting down at least 20 percent. Because the VA guarantees these loans, you don’t need to purchase it.
The VA charges a mandatory fee, called the VA Funding Fee.
It’s usually about 2 percent of the loan amount, and it’s typically rolled into the loan amount. It can even be waived entirely for veterans who have service-connected disabilities.
Another benefit to a VA loan is that it doesn’t have a prepayment penalty; you can make extra payments and save money on interest – and doing so can help you pay off your loan more quickly, too.