A loan product makes home ownership more accessible for younger buyers.
Despite the fact that today’s housing market is extremely difficult to navigate Mortgage rates have been at or near historic lows since mid-2020. The reason? Housing stock has been very limited and as a result house prices have skyrocketed at the national level.
Rising home prices don’t just mean higher mortgage payments – they also mean you have to come up with a higher one deposit while closing. And for many buyers this is a deal breaker. But there is a loan product that buyers don’t have to put aside at all to close, and it helps younger borrowers get some of the real estate action.
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Younger borrowers are turning to VA loans
According to a recent analysis by Veterans United, VA loan new home purchases rose 123% year over year for Gen Z veterans ages 18 to 24. For Millennial shoppers, VA loans rose 16%. In fact, loans for Generation Z and Millennial buyers accounted for 52% of all VA purchase mortgages in the first half of 2021.
VA loans offer one major advantage over other mortgages – they do not require any money to be taken out. As such, they are a great option for borrowers who can afford a monthly mortgage payment but may not have a lot of money to save.
As the name suggests, VA loans are not available to everyone. They are reserved for U.S. military veterinarians and their surviving spouses, as well as active members of the U.S. military.
There are also certain requirements that VA borrowers must meet. First, VA loans must be used to buy a home that a borrower will live in – they cannot be used on an investment property that is rented to someone else. Even though there is no official minimum credit rating for VA loans, individual lenders can set their own minimum amounts. Borrowers are generally advised to start with a decent credit score – ideally with a score in the low to mid 600 range or higher.
Otherwise, VA loans usually offer competitive ones interest charges, and they have no ongoing monthly fees (unlike, for example, FHA loans, the to do come with ongoing mortgage insurance premiums).
That is, VA loans charge borrowers a Sponsorship feethe amount of which depends on how much down payment a borrower can make. However, veterans with disabilities are often exempt from this fee.
If you qualify for a VA loan and want to buy a home, there are several worthwhile to buy from VA lender and see what offers they come back to you with. While homes are more expensive than normal today, you may find that you can swing one one if you have a sufficiently low interest rate on your home mortgage and you don’t have to empty your bank account to pay a deposit. And that gives you more financial flexibility to handle the various Home ownership costs You might come across them by the time you sign this loan and your purchase is complete.