VA Home Loans Vs FHA Loans For Veterans – Which Is The Best Choice?
Many US veterans who are in the market for a new home may be struggling to figure out if a VA loan rate is a better option than an FHA loan rate. While there are many great deals for FHA loans out there, without a doubt VA loans are the best option for mortgages. This is because only veterans of the United States’ armed forces are eligible to receive these loans and their interest rates are kept particularly low for both VA loans and VA Streamline Refinance.
It Is All About Interest
Part of the benefit of the down economy is that interest rates have been set at historic lows. This has a two-fold benefit. Overall, the lower interest rates help to encourage buyers in a sluggish real estate market and, as a home buyer or refinancer, it is of particular benefit to you.
Lower interest rates are favorable because they are the key to lowering your monthly payments to make them manageable for your budget. Veterans are offered special interest rates which can be lower than those generally offered to the rest of the country, although FHA mortgages are also lower than general rates. Though not always the case, FHA loan rates are currently higher than VA loan rates, making the VA loan the right choice for any veteran.
What is the FHA?
Created by President Theodore Roosevelt in the 1930s, the FHA refers to the Federal Housing Administration. This branch of the government was created in the post-Depression era as a means to increase the number of home owners among Americans. At the time of its creation – 1934 – the rate was only 40%.
Once established, the FHA offered mortgages to certain people and families at rates lower than what was offered by tradition banks. Roosevelt’s plan worked and within a few short years, US home ownership rose 20%. The FHA is a wonderful resource, especially to first-time home buyers.
What is a VA Loan?
As a member of the armed forces, the Department of Veterans’ Affairs, or VA, is no stranger to you. In addition to offering many services like health care to former soldiers, sailors, airmen and marines, the VA also offers financial help in the form of VA loans.
This program was begun in 1944, following the Second World War and, much like Roosevelt’s FHA, was designed to encourage home ownership, this time merely among veterans returning from the frontlines.
VA loans were not always run as smoothly as the FHA, but currently, they have fixed many problems and now offer a specific service to America’s bravest as a way to continue to thank you for your years of service to our country.
What Is the Difference?
Though initially set at similar rates, FHA loans are currently set higher than VA mortgage rates. These lower points are worth the extra effort it takes to acquire the VA loan as opposed to a straight bank loan. However, these rates are always subject to change, so it is vital to take advantage of them now.
Getting a VA Mortgage Loan
A VA mortgage is not actually given to you by the VA. Instead it is extended by private lenders who have a relationship with the Department of Veterans’ Affairs. Different private lenders may offer VA loans at different rates, making it essential that you comparison shop in the same manner as you would for a regular home loan. Going to a mortgage broker, also called a loan officer, is a good way to ensure that the rate you get for your VA loan is the best one available to you.
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