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Before
arranging for a new mortgage to finance a home purchase,
veterans should consider some of the advantages of VA home
loans
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Most important
consideration, no downpayment is required in most cases.
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Loan maximum
may be up to 100 percent of the VA-established reasonable
value of the property. Due to secondary market requirements,
however, loans generally may not exceed $240,000.
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Flexibility of
negotiating interest rates with the lender.
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No monthly
mortgage insurance premium to pay.
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Limitation on
buyer's closing costs.
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An appraisal
which informs the buyer of property value.
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Thirty year
loans with a choice of repayment plans:
a. Traditional fixed payment (constant principal and
interest; increases or decreases may be expected in property
taxes and homeowner's insurance coverage);
b. Graduated Payment Mortgage--GPM (low initial payments
which gradually rise to a level payment starting in the
sixth year); and
c. In some areas, Growing Equity Mortgages-GEMs (gradually
increasing payments with all of the increase applied to
principal, resulting in an early payoff of the loan).
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For most loans
for new houses, construction is inspected at appropriate
stages to ensure compliance with the approved plans, and a
1-year warranty is required from the builder that the house
is built in conformity with the approved plans and
specifications. In those cases where the builder provides an
acceptable 10-year warranty plan, only a final inspection
may be required.
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An assumable
mortgage, subject to VA approval of the assumer's credit.
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Right to
prepay loan without penalty.
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VA performs
personal loan servicing and offers financial counseling to
help veterans avoid losing their homes during temporary
financial difficulties.