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Texas VA Home Loans vs. Conventional Home Loans

Christine AndreskiAre you a Texas Veteran and are you considering buying or refinancing in today’s market? Buying or refinancing a home is a decision that takes both careful thought and planning. Most prospective homebuyers put an extraordinary amount of time into selecting just the right home or deciding whether or not to refinance. Have you considered that selecting the right loan is just as important? If you qualify for a Texas VA home loan, you owe it to yourself and your family to consider the advantages and the differences between conventional and VA home loans.

Obviously, the biggest consideration is the down payment. Conventional loans require a minimum down payment of 3%. But in today’s market, banks and lending institutions are requiring as much as 10-20% down. In light of the increasing defaults, lender’s seek to minimize their risk. Backed, by the Federal government, VA home loans eliminate both the lender’s risk and the borrower’s down payment thus providing the only 100% financed loan program. An excellent starting point in considering your loan program!

And then there’s the dreaded PMI (private mortgage insurance). Customarily, when a borrower finances more than 80% of the home’s value, the borrower pays PMI increasing the size of their monthly payment. Again, backed by the Federal government, VA home loans do not require PMI eliminating that expense.

We all are aware that today’s rates are among the lowest in US history. Although conventional loans are offering all-time low interest rates, lenders are offering even lower interest rates to qualified VA borrowers. Since VA Loans are backed by the Federal government (repetitive, I know) the lending institution’s risk is minimized and their willingness to provide lower rates is maximized. Simple math tells us that a lower rate plus no PMI equals lower monthly payments. A conventional loan with a higher interest rate plus PMI equals a higher monthly payment. Which would you choose? If the answer still isn’t clear, take a look:


And let’s not forget that the qualification standards for each loan type are very different. Because of the government guarantee, lending institutions assume less risk and have less stringent qualification standards with a VA home loan.

Based on all this information, a VA home loan or refinance is a smarter and easier choice for qualified Veterans. Are you a qualified Veteran? Let’s take see:

VA Loan Military Service Eligibility Requirements
Wartime Service
WWII     9/16/1940 to 7/25/1947
Korean     6/27/1950 to 1/31/1955
Vietnam     8/5/1964 to 5/7/1975

You must have at least 90 days on active duty and been discharged honorably. If you served less than 90 days, you may be eligible if discharged for a service-connected disability.

Peacetime Service
7/26/1947 to 6/26/1950
2/1/1955 to 8/4/1964
5/8/1975 to 9/7/1980 (enlisted)
5/8/1975 to 10/16/1981 (officer)

You must have served at least 181 days of continuous active duty and been under honorable conditions. If you served less than 181 days, you may be eligible if discharged for a service-connected disability.

If you are a Veteran and interested in a home loan, Lone Star Financing has dedicated consultants specializing in VA Home Loans ready to assist you in selecting the perfect loan. They will work with you through the home buying process and insure that you maximize the government assistance with your Texas VA home loan.

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