Buying a house is perhaps one of the biggest expenses an individual will incur in their lifetime. The cost of buying a home is usually high and will require most buyers to look for loans and other means of financial assistance. Good thing, the Department of Veteran Affairs offers home loan assistance to those on active duty, veterans, and surviving spouses of service members. Let’s take a quick look at some facts about this program. It might just give you the best mortgage rate in Utah, Washington, or wherever you are planning to settle down.
What is a VA Loan?
This mortgage loan program was established by the U.S. Department of Veteran Affairs to assist the active members of the armed forces, its veterans, and even the eligible surviving spouses and help them become homeowners. It puts in place qualifying standards, dictates mortgage terms offered, and guarantees a part of the loan. Private lenders, such as banks and mortgage companies, provide VA home loans.
How does it work?
Vets and those qualified can benefit greatly from the VA home loan program. It helps qualified applicants in building, repairing, retaining, or adapting a home for personal use and occupancy.
Qualified applicants can enjoy loans guaranteeing up to 100% financing on the home value. They may also choose to reuse the benefits or have it transferred to another qualified person. Some of the benefits included in VA loan terms are the following:
- There is no mandated down payment for the purchase unless it is required by the lender or if the selling price is above the established value.
- A private insurance mortgage premium is also not required.
- The closing costs are limited and can be paid by the seller.
- Prepayment penalties may not be charged by the lender.
- VA assistance is available to help qualified and existing borrowers avoid default.
- Several other states offer additional benefits like property tax reductions.
Veterans, Active-Duty Personnel, National Guardsmen, and Reservists may obtain their certificate of eligibility (COE) in the following ways:
- Through the lender
- By mail using VA Form 26-1880. For surviving spouses, use VA Form 26-1817.
The VA loan is good for the following purchases and purposes:
- Purchasing a home
- Purchasing a townhouse or a condo in a VA-approved project
- Constructing a home
- Home repairs, alterations, and improvements
- Simultaneous home purchase and improvement
- Installation of solar heating and/ or cooling, and other energy-efficient installations
- Purchase of a manufactured mobile home or lot
- Purchase and improvement of a lot for a manufactured mobile home that you already own and occupy
- Refinancing a manufactured home loan for lot acquisition
What are the different types of VA loans?
The VA has several loans designed to help vets and their families:
- VA Home Purchase Loans help veterans acquire a home at competitive rates.
- Cash-Out Refinance Loans allow vets to borrow against home equity for debt payoffs, school funds, or home improvements.
- Interest Rate Reduction Refinance Loans (IRRRLs) help borrowers get lower interest rates by refinancing existing VA loans.
- The Native American Direct Loan Program assists eligible Native American vets with their home loans on federal trust land.
- Adapted Housing Grants are designed for veterans that have permanent and total service-related disability purchase or remodel a home to adapt to their physical condition.
Simply put, a VA loan enables qualified buyers to purchase a home without the need for a downpayment. Go to the nearest VA center in your area for more information.