A purchase loan is a smart idea for first-time home buyers or anyone who might not qualify for a loan from other lenders because of issues with credit scores or income.
Chicago, IL (PRWEB) May 19, 2013
The Federal Savings Bank reminds veterans that The U.S. Department of Veterans Affairs offers multiple options for current or first-time home buyers who are looking for financial assistance. Each type of loan comes with different advantages, regulations and qualification requirements. Here are basic facts on the four main types of VA home loans to give veterans a choice in what is right for them. If interested in learning more, call the Federal Savings Bank at (877) 788-3520.
Purchase Loan: Just like it sounds, a purchase loan is a standard VA loan to help buy a home. However, it can be more helpful than a traditional loan. A VA purchase loan can get a more competitive interest rate, and it is easier to qualify for when compared to non-VA mortgages. Because of this, a purchase loan is a smart idea for first-time home buyers or anyone who might not qualify for a loan from other lenders because of issues with credit scores or income.
Cash-Out Refinance Loan: This option will refinance the current loan and let the lien holder take cash from the home equity value. It's a good way to get money when ones need it, such as in a case of debt or other expenses that need to be tendered. The current loan does not need to be a VA loan in order to qualify for refinancing. A cash-out refinance will replace a non-VA loan with a VA loan. The new loan can generally be up to 90 percent of the value of a home.
Interest Rate Reduction Refinance Loan (IRRRL): Unlike a cash-out refinance loan, an IRRRL can only be used if an existing mortgage is a VA loan. The government refers to this as a VA to VA refinance. The benefits of this option are the same as with a traditional refinancing. It can lower the interest rate, which reduces the monthly payments, and one can switch from an adjustable to a fixed rate mortgage.
Native American Direct Loan (NADL): Under certain conditions, Native Americans are eligible for this separate kind of loan. The interest rate on a NADL is set at a fixed rate of 3.5 percent, and the mortgage can only be used to buy, build or renovate a house on Federal Trust Land, according to the Veterans Affairs web site. This loan can also refinance a current VA direct mortgage.
All of these options are VA guaranteed, which means that although the loans will likely go through a private lender, the VA backs the purchase.