You may have heard of VA loans as a great military service benefit. A Veterans Affairs loan is a mortgage loan in the United States issued by private lenders and assured by the US Department of veteran affairs. As part of the original servicemen act, the GI Bill of Rights in 1944, the VA home loan program was created, but it only gained popularity in recent years. VA home loans have played a vital role in the lives of active duty service members, widowed military spouses, and US veterans by helping them become homeowners.
As much as these loans can be beneficial, only approximately 6% of service members use it. Many of them still do not consider this as an option because they are not fully armed with information about this program. They also think that applying for the loan is a lengthy process. In this article, we debunk such myths as we explain everything you need to know about these loans.
As part of serving you as their mission, they help you buy, build, repair, retain or adapt a home by providing you with a house loan guarantee benefit and other house related programs for your occupancy. Mortgage companies and banks offer VA home loans as private lenders. There are two types of VA home loans that play different roles. These loans include a VA backed home loan and a VA direct loan.
- VA direct home loan. VA direct loans act as your mortgage lender. In such instances, you work alongside them to apply and manage your credit.
- VA-backed home loan. By VA backed home loans, some part of the loan you get from a private lender is guaranteed. The guarantee lets the lenders recover their losses, either partially or in full when the credit goes into repossession. Due to fewer risks to the lender, the terms might be exceptional. Almost 90% of VA backed home loans are issued without down payments. When making VA backed up loans, lenders often follow the VA standards. Before you are granted a loan, you will be required to fall in with added standards like getting an updated home appraisal, and a good enough credit score.
Credit issues have hindered many from getting loans in their time of need. Many lenders have developed policies that limit them from gaining access to any investment. However, to qualify, VA guidelines have not stated a minimum credit score. Bankruptcy, foreclosures, or lower credit score will not disqualify you from VA home loans. Following bankruptcy or foreclosure, VA considers your credit renewed after settling two years of clean credit. There are many reasons many homeowners across the US, experience foreclosures, and bankruptcy. Some of these financial setbacks include medical emergencies, lack of source of income, and unforeseen events. Luckily, service members can get VA loans against all these odds.
You can get this loan from local lenders. The United States government does not precisely provide this loan, but they guarantee a part of it so that your mortgage company or lender gives you a credit that is suitable for your needs without stringent measures. The insurance is provided to lenders in a process known as the guarantee. When the veteran can no longer make payments, the lender is assured by the VA of repayment.
For the VA home loan, once eligibility is earned, it never fades. It is not a one-time kind of qualification. You can use it multiple times to get a new home or to make adjustments. In many cases, people tend to outgrow their homes, and the urge to get a bigger one increases. You can quickly sell your home and pay off the VA loan. Since your entitlement is restored in full, you can buy another home by reusing your benefits.
How long you have been in the service will not be a problem. If your eligibility is secure, you can buy a home anytime, if you never used your benefit. However, it is essential to be vigilant as you buy your home with a VA loan. Experts at JakeTaylor.com recommend using a mortgage professional service to guide you through the stages of possessing a home through the VA loan. In this way, you can get the right advice to help you understand your mortgage options, and you can know how much will go where, as you embark on your homeownership journey.
PMI is private mortgage insurance, mostly used for lenders’ protection. This kind of coverage is no longer mandatory since the government gives a guarantee on VA loans. Therefore, VA loans can help you save on monthly payments that you would otherwise have to make.
If you have a VA-eligible person, you can quickly transfer your VA loan to a future home buyer regardless of whether they are in the military or not. However, after the assumption, your entitlement will remain attached if your buyer doesn’t have the VA entitlement. Assumable loans can be beneficial when selling your home.
Many people tend to put off buying houses and other assets since they don’t have enough down payment saved up. Unlike conventional loans that require at least 3.5% of 5% down payment, VA loans are financially advantageous. In such instances, considering VA loans can save service members this trouble. With a VA loan, you can finance 100% of your home’s purchase value.
Instead of saving for a down-payment, with a VA loan, you can instantly get what you need and avoid steep mortgage insurance fees. VA loans save you tremendous money and give you authority over your buying decisions.
In 2015 alone, more than 3000 spouses purchased a home using their partner’s VA benefits. Unmarried wives and husbands of fallen service persons have a chance of buying a house without mortgage insurance or paying anything. Through this benefit, the funding fee is waived. This benefit helps them move on after their loss.
The facts we have stated above about VA loans show how much these loans can be beneficial to service members. This great scheme helps appreciate the effort of the members of the military in keeping the country running.