The VA home loan offers some unbeatable benefits for active military members and veterans. From $0 down, to no mortgage insurance, to relaxed credit requirements, the VA home loan is definitely worth exploring while searching for a home. Here are the top 4 benefits of the VA home loan.

Top Benefits of the VA Home Loan

$0 Down Payment

The down payment is typically the most challenging hurdle for prospective home buyers, especially first-time home buyers. Qualified veterans can obtain a VA home loan without making any down payment at all. Compared to Conventional and FHA home loans, this translates to significant savings upfront. Conventional home loans typically require at least 10 if not 20 percent down, while FHA home loans require at least 3.5 percent down. The amazing benefit of being able to purchase a home with $0 down is that veterans get to fulfill the American Dream without having to spend years saving up for a down payment.

No Mortgage Insurance

A lot of first-time home buyers are going with an FHA loan since the down payment required is 3.5% (as opposed to the conventional 10 or 20 percent). The down side to paying 3.5% down is that it comes with mortgage insurance of a few hundred dollars a month (depending on the loan amount). The VA home loan doesn’t require monthly mortgage insurance. Skipping the monthly mortgage insurance will help veteran home buyers save hundreds of dollars per month.

Low Interest Rates

Typically, the VA home loan offer the lowest interest rate of all loan types. Since the VA guarantees a portion of every VA loan, financial institutions can offer lower interest rates than other loan types (0.5 to 1 percent lower than conventional rates). On a 30 year $250,000 loans, the difference between paying 4 percent and 4.75 percent equates to $40,000 in savings over the life of the loan. This is one of the top benefits of the VA Home Loan.

Flexible Credit Requirements

Veterans don’t need a perfect score to secure home financing. In fact, the flexibility of credit score allows more veterans to secure a home loan than if they went with a conventional loan. Some lenders allow scores as low as 580 which is significantly lower than the 620 minimum score for other loan types. The flexibility of credit requirements allows veterans to buy a home faster as they don’t need to spend years on credit repair.

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Buying a home is 38% cheaper than renting a home. This is especially true if you plan on living in one space for at least seven years. As mortgage loans are more affordable now with down payment assistance and different loan options, let’s take a look at the financial benefits of owning a home.

Financial Benefits of Owning a Home

Building equity

One of the largest financial benefits of owning a home is building home equity. When you pay rent to your landlord, you’re setting aside a chunk of money that you’ll never see again. Additionally, landlords have the right to raise your monthly rent yearly, so what you pay today could differ than what you pay monthly next year. When you sign a mortgage loan, you are agreeing to the monthly payment for the life of the loan (likely 15/30 years). So, you can accurately budget your spending every month on your mortgage. When you pay your mortgage, you are building equity as you are paying off your loan. This means that unlike renting, you will see these funds applied directly toward what you own.

Tax benefits

Another one of the biggest financial benefits of owning a home is the mortgage interest deduction. Most of your monthly mortgage payments will go towards interest in your first few years of homeownership. You are able to deduct that interest from your taxes, if your loan is $1 million or less. Additionally, any taxes you pay to the government on your property are deductible from federal income tax.

No longer moving every year

Homeownership increases sustainability and stability. While moving every year from rental to rental may be necessary for your lifestyle, it is a major inconvenience and a financial and emotional burden. Renting can mean you may never know where you are going to live in a year, or how much you’ll be paying. Owning a home allows a financial and emotional investment in both your physical home and your community.

Use your home investment toward another investment

The equity that comes from paying a mortgage is what allows many individuals make future investments in the same home (refinancing, renovations), a higher-valued home (using the equity toward a down payment), a second home (using equity toward a second down payment), or additional financial goals (paying off debt, buying an RV). A home equity line of credit helps homeowners use that part of their home that’s already paid off to obtain financing for additional investments.

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In the last two decades, real estate has outperformed the stock market at a ratio of 2:1. Real estate has continuously been ranked as the best way to invest money not needed for more than 10 years. So why aren’t more people taking advantage? Here are the 5 top reasons to invest in real estate.

5 Reasons to Invest in Real Estate

Immediate cash flow

Once you buy a property and rent it out, you are receiving cash flow within that first month, and every money after that. If you buy in a hot market, you’re able to use the cash flow to pay back that mortgage as well as use the additional funds for repairs, paying a property management company, or any other house related expense.

Appreciation

While appreciation is largely dependent on property, location and economy, the bottom line is that the US population is growing and the need for housing continues to increase. By way of supply and demand, your home’s value will increase over time. For example, since the inventory of homes in Western Washington is in a shortage, buyers will be willing to pay more for your home since there isn’t much competition.

Equity

If you make paying off your mortgage a priority, the amount of equity – or the amount of house you actually own – grows quickly. If you pay more toward your principal, choose shorter loan terms, and focus on home improvements, you can speed up the pay off process. By paying more toward your principal, the faster your build equity, even if your home is appreciating slowly. By choosing shorter loan terms, you are eliminating the interest rate for the years you aren’t paying a mortgage. For example, a 15 year mortgage is more per month, but over time you actually save a significant amount since you aren’t paying interest on the last 15 years. Finally, by focusing on home improvements, you increase the value of your home and narrow the gap between how much it’s worth, and how much you owe.

Tax breaks

Investing in real estate can come with tax breaks, which makes this one of the top reasons to invest in real estate. Mortgage interest, operating costs, property taxes, and insurance are among the areas you’re able to deduct from your taxes. You’re sending less money to the IRS, and increasing your cash flow.

You don’t have to be the landlord

If you buy an investment property with the idea of just wanting the monthly income without doing the maintenance, a property management company can help you. When you hire a property management company, they can take calls about leaky faucets and drafty windows. Yes you’ll be receiving less monthly income since you’ll have to pay the property management company, but you’ll have much less to worry about. This is an especially good idea for those who buy a rental out of state.

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