Re: Anyone use a VA home loan before?
A VA loan is a loan the has a guarantee funding (just like FHA). The qualification process for the loan is exactly the same as any other loan. The VA loan has different interest rates from conventional loans, usually a little higher but right now the VA is a little lower.
What the VA loan does for you: 1. You can buy a home with no down payment. 2. Since the loan is guaranteed, you will not need PMI (Private Mortgage Insurance). 3. You can roll your part of closing costs into the loan.
HOWEVER, the VA loan is NOT free unless you have a minimum disability from the VA at the time of your discharge (or later). The VA Funding Fee is 1.5% of your loan value. It can be rolled into your loan. Every VA loan after the first has a 3% funding fee. If you have a down payment, those fees can go down. VA also may have rules about the purchase of foreclosures or short sale properties ( I have not dealt with those).
Here is my take: You have to determine how long you will be in this home. This is the key to determining if a VA loan is better (cheaper) for you because 1.5% of a loan is a lot of money in that funding fee. The other aspect of this is, if you will only live in this house for 2-5 yrs, you may need another VA loan on the next home. Now that funding fee is 3%, and that is a kick in the junk because your next house will probably cost more.
You must compare the 1.5% funding fee to the cost of PMI insurance of a conventional loan. You will find that if you live in the home 5 years or less, the PMI will be cheaper. If you funding fee is higher, PMI will be cheaper up to about 7-8 years. This is where you need to do your homework.
My personal rant: Zero down home buying is one of the features that cause the housing collapse. If you don't have 10% or more to put down, you probably shouldn't be buying a home.