As of October 1, 2011 first time active duty or veteran first time users will have the funding fee reduced from the current 2.15% to 1.4%.
VA loans are phenomenal low cost loans with endless benefits.
- No down payment on loan amounts up to $417,000
- No mortgage insurance
- Fixed interest rates competitive to conventional and FHA loans
- Limitations on closing costs
- Assumable – when going to sell the home the mortgage can be used as a sales tool, by offering the interest rate associated with the current lien on the property to the new buyer for the remaining of the mortgage. The new buyer does not have to be VA eligible; however they must qualify per credit, income, assets. This is huge for VA buyers in the current market of low interest rates.
- No prepayment penalties
- Funding fee can be added onto the loan
Putting 5% down will have a .75% fee for active and 1% for reservists.
Putting 10% down will lower the fee to .5% for active and .75% for reservists.
Anyone desiring to use a VA loan for subsequent use will see their funding fee drop from the current 3.3% to 2.8%.
As of today, 09/16/2011, interest rate is 4.25%. This is with NO extra fees and with lender’s credit.
What are extra fees? Extra fees are fees like origination fee or discount fee that lenders charge to lower the interest rate. I think of these charges as pre-paid interest.
What is lender’s credit? Some lenders give out lender’s credit to help out with buyer’s closing costs.