VA Loans vs. Conventional Loans in Vermont.
A majority of Vermont homebuyers are stuck with one home financing option, which is a conventional loan. However, qualified military members have an outlet in VA loans. Both loan types cater to different needs of the homebuyer. However, theres no telling which one suits you without knowing some of the main differences between conventional and VA loans in Vermont.
Qualified Vermont home buyers can receive no down payment loans.
Without question, the down payments are the most noticeable difference between the loan types. Due to the credit crunch and housing collapse, lenders expect down payments as high as 20 percent for a conventional loan. Vermont VA loans
, on the other hand, come with a no down payment option to qualified borrowers. This means that Vermont residents can fully finance a home worth up to $417,000.
Vermont VA Loans offer no prepayment penalties.
Prepayment penalties are yet another notable difference. There are no prepayment penalties with Vermont VA loans. Prime mortgages do not always come with such penalties since borrowers can avoid them or never hear about the option. On the other hand, subprime mortgages
are more likely to come with prepayment penalties. Agreeing to this penalty means getting a lower interest rate on a traditional loan, but prevents borrowers from paying at a faster pace.
Interest Rates on VA loans in Vermont are negotiable.
When it comes to interest rates, VA loans in Vermont come with negotiable rates. This is due to the Department of Veterans Affairs guarantee on up to 25 percent on every loan. Active-duty homebuyers get capped interest rates, and VA loan borrowers have refinancing options that can lower interest rates. Conventional loans set interest rates based on market fluctuations, the length of your loan, and the type of mortgage. Fixed-rate or adjustable-rate mortgages
should be examined with a loan officer who truly understands your needs and financial capabilities.
Private Mortgage Insurance does not apply for VA loans.
VA loans in Vermont do not require private mortgage insurance, whereas conventional loans with down payments of less than 20 percent have this extra monthly cost. Although VA loans come with a VA funding fee that starts at 2.15 percent of the loan value for first-time borrowers in the program, there is an option to build this tiny cost into monthly payments. The fee keeps the program solvent, allowing other service members and veterans to capitalize on their VA loan benefit.
Check your eligibility for a Vermont VA Loan.
Not all military members are eligible for the program. Generally, if you fall into one of three groups, you may be eligible: 1.) Military members who served on active duty for 90 days during wartime or 181 days during peacetime. 2.) Reservists and National Guards members who served for at least six years. 3). Spouses of those who died in the line of duty or as a result of a service-related injury. Lending practices are more lenient for VA loans compared to conventional ones. Imperfect credit, a foreclosure or bankruptcy and debt-to-income
ratios as high as 41 percent are acceptable.