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VA Loan

July 30th, 2012 6:07 PM by Gregg Mower

Veteran Administration Loans or VA loans are loans designed to get America’s Veterans into homes. The program was formally established by congress in 1917 after World War I, the GI Bill of 1944 was established to provide benefits for our veterans to include housing and Medical benefits. The program is to reward those who have given or risked their lives to keep America free. VA home loans are loans that are guaranteed by the federal government, which means if a private lender who owns a VA loan has a default or foreclosure the lender is guaranteed money from the Federal Government to offset the cost of foreclosure. What this means to the Veteran is that they can purchase a home with no money out their pocket or zero down payment. When someone in the military has reached 180 days of active duty service in the military they become eligible for their housing benefit. So while they are still in the Military they can purchase a home for their family. Of course once a veteran has served the initial 4 year commitment they to are eligible for the housing benefit.

The Benefits of a VA are most importantly the fact that you can purchase a home with no money down and if you have the seller pay for the closing costs or take a higher rate and have the lender pay the closing costs. The idea here was to allow veterans coming home from war, who had not had time to save money, to purchase a home. This is still in effect today, however, the veteran must show that he or she has a job that can support the new house payment. Another benefit of a VA loan is that there is no monthly mortgage insurance thus keeping the monthly mortgage payment lower than its FHA counterpart. A VA loan does have a use fee or sorts called the VA Funding Fee. This fee is added to the loan amount or can be paid by the seller or the lender. The fee is 2.15% for a first time user of a VA loans. If you have had a VA loan before you can have another VA loan provided that original house you used your VA loan on has been sold and the loan was paid off. VA loans are assumable loans so another veteran can assume the loan so if you have used your VA loan benefit prior and had your loan assumed you might want to check with the Veteran’s Administration to see if you have the benefits available again or your lender can check for you. Note that if you are second time user of your VA loan the Funding Fee will be 3.3% of the loan amount and can be added to the loan amount or paid by the seller or the lender.

The only paperwork a Veteran needs to provide a lender is his or her DD214 (separation papers) and the Certificate of eligibility ( if you do not have you can get it on line though the VA portal or you can fill out a request and the VA will send you a copy of your certificate. In addition you will need to provide qualifying documentation such as pay-stubs and bank statements and tax returns and the lender will run a credit check on you as well. The lender is under the rules of the VA as well so everything do is to protect the Veteran with regards to the house they are purchasing. The lender will require an appraisal that is highly detailed to protect the Veteran from a bad house. The lender will also require the a termite report is done and cleared on the house. The VA loan is designed to protect a Veteran from a home that could be a “money pit” of repairs. Once all this work is complete and the house meets VA’s tight standards then the lender will allow the loan fund and the Veteran can move in. This was just a quick look at the VA loan for more details please contact one of our qualified loan consultants and they will walk you through the process.

Posted in:General
Posted by Gregg Mower on July 30th, 2012 6:07 PM



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