When does a VA loan not make sense?
Does it ever make sense for those who qualify for a VA loan to not take one out? Mark Klein, founder of PCL Financial Group in Westlake Village, California, said that it all depends on the funding fee. That fee, especially if you don’t come up with any down payment, can be hefty, and might outweigh the other benefits of a VA loan.
“That fee can be inhibitive,” Klein said. “That’s really the main reason why you might pass on a VA loan.”
Klein, though, does recommend that those who are eligible for a VA loan at least investigate the product. Even with the funding fee, the loan might be the best financial choice. Buyers who take out a VA loan don’t have to pay the funding fee upfront. They can roll it into their total mortgage. This will make their monthly payment a bit higher each month but can make the fee less of a financial burden.
And if your biggest challenge is coming up with the cash for a down payment, rolling the funding fee into the loan and going with the VA’s no-down-payment option might be the best choice for you.
“It is always worth the time to see how a VA loan compares with the other options,” Klein said. “It might not pay off, but it might be the best loan option for you.”
As published in MortgageLoan.com featuring our very own Founder, Mark Klein. https://www.mortgageloan.com/are-va-loans-always-the-best-choice-for-veterans