The recent economic collapse has made it hard for many to qualify for a mortgage. When it comes to housing, some have no choice but to rent. The climate has made it a landlords’ market.
According to Trulia’s Winter 2012 Rent vs. Buy Index, the buy-to-rent ratio is widening. In 98 of 100 largest U.S. metropolitan areas, rising rent costs and falling home prices make buying a home is cheaper than renting one.
As if falling home prices aren’t enough, mortgage interest rates are also at historic lows. Now may be the best time ever for a VA purchase loan. Here are 3 ways a VA loan can reinforce that owning is better than renting.
1) VA loan qualifying is typically easier than conventional
Qualifying for a VA loan is easier than many might think. The VA guidelines give lenders flexibility to determine whether a veteran is a satisfactory credit risk. Typically, VA-approved lenders will require 41% debt-to-income ratio. Conventional lending can run between 28% and 32%. The VA also provides lenders with a very straight-forward residual income table, which shows whether borrower can afford their loans. And, since the VA does not require a minimum credit score for qualifying, lenders often approve VA loans for people with lower credit scores if they can prove they are able to pay back the loan.
2) VA loans require no down payments up to $417,000
Because VA loans can be obtained with nothing down up to conforming loan limits, borrowers don’t need a large chunk of change to get into a house. In today’s lending market FHA lenders require at least 3.5% down, and conventional lenders can need up to 20%. Those who are struggling financially may find it difficult to save enough money for a down payment on a home purchase. VA-approved lenders consider the federal guarantee on veterans’ mortgages enough collateral. So, VA borrowers don’t have to worry about saving for a down payment on loans up to $417,000 in most average-cost cities.
3) Buying a home with a VA-guaranteed loan makes it yours
Paint the walls purple, nobody’s stopping you. A home purchased with a VA-guaranteed loan is yours to do with what you want. The VA even has a program for financing “green” home improvements right into your VA loan.
For more about renting vs. owning with a VA loan, contact a VA-approved lender.
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