VA Home Loan with 0 Down

A house is a great property investment. Not only does it appreciate over time, but you also get tax benefits. However, it is still a long-term financial and personal commitment. This is why we have prepared 8 questions you should ask your lender before buying a home.

All You Need to Know When Buying a Home

  1. What can I comfortably afford?

Your lender will pre-approve a specific loan amount based on your creditworthiness, financial standing, assets, and debts. With that said, just because the lender informs you that you can get a higher loan doesn’t mean that you accept it. You should always factor in the home expenses, taxes, insurance, utility costs and maintenance, and homeowner’s association dues. It may seem like the monthly loan payment is affordable, but you will realize soon that it will be a financial burden if you don’t account for all the other costs. For this reason, you should always consider what you can comfortably afford, meaning that you will have some financial wiggle room for yourself.

  1. What loans can I apply for?

As a military servicemember or spouse, you can apply for a VA home loan so long as you fit their minimum requirements. The Veteran of Affairs is the one who guarantees the loan, which is why most VA loans do not require a down payment. Double-check with your lender so that you are aware of all the options and their pros and cons.

  1. What’s my minimum down payment?
    This varies depending on the home you choose and what loans you are eligible for. If you are eligible for the VA home loan, you will likely have no down payment or a low one. It is worth noting that the advantage is for those with a higher down payment. This means that your monthly payments and interest rate are lower.
  2. Am I allowed to use gift money as my down payment?
    This may be a strange question, but some families receive gift money to help them purchase a home, so this is a valid concern. While you can use money that has been given as a gift, the lender may ask you to prove that the money is not a loan. Furthermore, the money can also be taxable depending on the state gift tax law, so it is best to consult a tax advisor regarding this.
  1. What’s PMI? Do I need it?

PMI stands for private mortgage insurance. When buying a home, this is sometimes required when the down payment is less than 20% of the house’s sales price. This really depends on what type of loan you have, so make sure to check with your lender.

  1. How do interest rates work?

Your interest rate has a direct impact on your monthly payment. In other words, the higher the interest rate, the higher your payment. You should discuss all your options with your lender to secure the best interest rate. The best thing is to set a fixed interest rate as you negotiate with the lender so that you avoid fluctuating in costs for years to come.

  1. Are there closing costs?

This is one of the up-front costs that you ought to prepare for as it has to do with document preparation, title insurance, home inspection, and other fees. Check with your lender to see if they can provide a “good faith estimate” of closing costs.

  1. Will the monthly payment include my taxes and homeowner’s insurance?

This will depend on your loan because it is already included for. Taxes and insurance are crucial things to be aware of when owning a home, so make sure to check in with your lender.

Buying a home is certainly overwhelming, but if you are prepared for all these outcomes, it should make it easier for you to make the right decision.