VA loans are the mortgage loans in United States that are guaranteed by the department of Veteran Affairs. VA loan were designed to provide long-term financing to the eligible American veterans. In case of death, surviving spouses of American veterans are also eligible to enjoy benefits of using a VA loan if they do not marry again. The loan is provided as a form of gratitude to the veterans for their commitment in protecting United States which is considered a heroic act because of the sacrifices involved.
Aim of A VA Loan
The basic intention of the VA home loan program is to offer home financing to all eligible veterans in areas where private financing is hard to get or totally unavailable. A VA loan enables veterans to purchase properties without any down payment. It is a way for the US government to give back to servicemen, servicewomen and veterans by offering special financing to enable them afford the dream home they always wanted. A free VA loan calculator tool can be used to see just how much savings Veterans can receive.
Areas where veterans are designated to be eligible for loans are:
• Housing credit shortage areas
• Rural areas
• Small towns and cities far from commuting or metropolitan areas of larger cities
Who is eligible for A VA loan?
• Serving personnel
• Reservists and National Guard members
• Surviving spouses who have not remarried
The main benefits of using a VA loan are:
Lower Interest Rates
A loan with high interest ends up hurting the borrower because it takes a lot of money and time to repay. VA loans are friendly because the borrowers get lower interest rates than ordinary rates for other types of loan. It translates to lower payments per month therefore if you get a VA loan, you can afford to pay down the amount of your loan faster than other loans with higher interest.
No Down Payment
When purchasing a new home, you have to come up with a specific amount of down payment. The range depends on the total price of the property, but it can be an expense that can be quite costly. Most families save up for many years to afford the down payment for a new home but with VA home loan, most lenders no longer ask for down payment before issuing the loan. They also offer a lower VA funding fee for a loan depending on the size of provided down payment. This waiver has helped many veterans to become homeowners without money down. It is, therefore, a great and easier way to have a treasured piece of the American dream.
No Requirement for Private Mortgage Insurance
Some years ago, there was a housing recession. As a result, most banks insure themselves by adding private mortgage insurance just in case recession occurs again. Private mortgage insurance (PMI) is an added fee for any loan without the needed 20 percent of appraised value of a home. This insurance will protect the lender if a borrower ever defaults on monthly payment. Since VA loan do not need a down payment, it means that military men and women will not be required to have a PMI. This will result in lower monthly mortgage payments.
Simple loan acquisition is among benefits of using a VA loan. Applying for VA home loan is more like applying for any other conventional home loan. The major difference is that you should get a certificate of eligibility from Veteran Affairs. VAHL process takes will take 2-6 weeks. This is about the same length of time that it will take to process a conventional loan. It is also easy to find a lender. Almost any lender who offers conventional of FHA loans also offers VA loans therefore it will not be hard to find one to assist you.
Other benefits of VA loan are that there are no limited closing costs, penalties for loans paid early and support in the cases where veterans encounter difficulties in making their payments for the loan.
VA does not impose any limits on the size of loan that you can acquire, but it has a maximum that will be guaranteed according to law.
There is also guarantee for a warranty from builder and help VA to get the cooperation of builders if the VA inspects the home. Check out the Veteran’s Affairs website for more information.