December 4th, 2018
In 1944, the US government created the VA Loan program. The initial focus was simple - help those who were returning from war purchase their home and become an American homeowner. Since that time, these VA loans have helped over 18 million military members buy their dream homes.
What Is The VA Loan?
The VA loan is one of the best ways for veterans to borrow money to buy a home. These loans are guaranteed by the US government. While they don't actually issue the loans, they instead pledge to repair roughly one-fourth of the loan if the borrower defaults. This guarantee helps make it easier for lenders to extend money to those who may not otherwise have qualified for a loan.
In turn, this leads to numerous benefits to the borrowers. However, only those who are active service members or former members of the military will be able to qualify for the loans. Those who do qualify will get great rates and competitive terms, making the VA home loan an option well worth looking at.
What Are The Main Benefits Of The VA Loan?
There are several substantial benefits that the VA loan program offers to borrowers, most of which have to do with the fact that it's much easier for borrowers to secure a loan that they may not have qualified for otherwise.
In particular, the biggest benefit is that a borrower can secure a loan without having money for a down payment. It's nearly impossible to find other lending programs that allow you to take out a mortgage without having 20 percent of the total home value as a down payment. But, coming up with that money can be difficult. VA loans make it easier.
The VA loan also has numerous other benefits including:
•No penalties for prepayment of the loan
•Debt to income ratios that are easier to qualify for
•Streamlined, easy refinancing opportunities
•Interest rates that are on par with or even lower than those in a conventional loan
•Ability to take out a purchase or even a cash-out refinance loan
•Higher loan limits, allowing you to ensure you buy the home of your dreams.
Simply put, a VA loan is one of the best ways for veterans to buy a home and is something that deserves the attention of any military member.
Who Can Get A VA Loan?
It's estimated that only about 10 percent of the nation's eligible veterans actually take advantage of the VA loan. In fact, 20 percent of veterans aren't even aware of the program at all. IN order to qualify, you must fit into one of these three categories:
•Those who have spent at least six years in the National Guard or Reserves
•Military members with at least 181 days on active duty or who have served three months of duty during wartime
•Spouses of soldiers killed in the line of duty
In order to get a loan, you must request a Certificate of Eligibility from the VA. This document allows you to seek out a lender that uses the VA program and get a VA loan through them. The government doesn't actually issue the loans but instead makes it possible for various lenders to do so.
If you're a veteran looking for your first home, the VA loan could offer you better rates and better terms than any traditional loan available. And the lack of a down payment requirement means that you have more money in your bank account to enjoy life as a homeowner.