Why VA Loan Drawbacks Don't Matter

VA loans have long been a popular choice for veterans and active military members looking to purchase a home. However, some potential borrowers may be deterred by certain drawbacks associated with VA loans, such as the VA funding fee and appraisal cost. But, in reality, these drawbacks don't really matter when compared to the numerous benefits of a VA loan.

The VA Funding Fee

One of the main drawbacks of a VA loan is the VA funding fee, which is a fee the VA collects in order to guarantee the loan in a default. This fee can be costly, but it's important to remember that it's much lower than private mortgage insurance (PMI) on other loan types. Additionally, the VA funding fee can often be financed into the loan, making it more affordable.

Appraisal Costs

Another drawback of a VA loan is that appraisal costs can be higher than with other loan types. This is because the VA requires a more thorough appraisal process to ensure the home meets certain standards. However, it's important to remember that this extra scrutiny can actually be beneficial for buyers, as it can help to ensure that the home is safe and livable.

Benefits of a VA Loan

Despite these drawbacks, the benefits of a VA loan far outweigh any drawbacks. For one, VA loans offer a lower interest rate compared to other loan types. Additionally, VA loans don't require a down payment, which can make it easier for veterans and active military members to purchase a home. Furthermore, VA loans don't require mortgage insurance, which can save borrowers thousands of dollars over the life of the loan.

VA loans also have more lenient debt-to-income (DTI) requirements, which can make it easier for borrowers with high levels of debt to qualify for a loan. And, VA loans have less strict underwriting guidelines, which can make it easier for borrowers with less-than-perfect credit to qualify for a loan.

In conclusion, VA loans may have some drawbacks such as the VA funding fee and appraisal cost but these drawbacks don't really matter when compared to the numerous benefits of a VA loan. The benefits of a VA loan are many and include lower interest rates, no down payment, no mortgage insurance, higher DTI, and less strict underwriting guidelines. So, if you're a veteran or active military member looking to purchase a home, a VA loan may be the best option for you.