Data indicates that VA loans are significantly more popular in 2020 than they were in previous years. Due to the coronavirus pandemic, the average mortgage rates have hit record lows. This has encouraged many homebuyers to take advantage of the situation so they can own their own property. Meanwhile, existing homeowners have fought to refinance their current mortgages.
With all of this loan activity happening, the increase in VA loans isn’t all that surprising. Since 2020 began, the VA loan activity rates have more than doubled. Nearly one million loans were backed during the year’s first three quarters. In addition, purchases involving the VA have increased by seven percent. A majority of the growth can be attributed to young people buying their first homes.
To qualify for a VA loan, you must be the spouse of a military member who died while on duty, an active military member, or a former military member. If you do meet these requirements, applying can be great for your finances. The most significant advantage is that these loans don’t require a down payment on a mortgage, so they’re more accessible to families on tighter budgets.
Qualifying for VA loans also tends to be easier than qualifying for traditional mortgage lending. Instead of being controlled by a financial institution, these loans are controlled by the Department of Veterans Affairs. You don’t even have to meet a minimum requirement for your credit score.
VA loans also don’t require you to purchase private mortgage insurance if you’re unable to pay 20 percent of the home’s cost upfront. Mortgage lending institutions require people to make this purchase to secure their finances.
There are the occasional drawbacks to the VA loan structure. These loans include a funding fee, which varies based on how much you can offer for a down payment and whether this is the first loan you’ve taken from the VA. Even so, if you can’t afford a lump sum out-of-pocket, you can add this fee to your monthly payments and pay it off slowly over time instead.
If you have a stable enough financial future to pay for homeownership costs, now is an excellent time to apply for a VA loan. It’s much easier than a traditional mortgage application process.