Real Estate: Va Loans

If you or your spouse has ever served in the armed forces you may qualify for a VA

loan which will assist you in obtaining financing in order to purchase a home. The Veterans Administration (VA) loan works for both service women and men to help them get their mortgage. There are requirements that state you must have served more than 90 days in the military and been granted an honorable discharge before you can be approved for a VA loan. The Department of Veterans Affairs website can assist you if you have any questions about your personal eligibility due to your record in the service.

What is a VA Loan & How Does it Work?

The Veterans Administration itself does not actually have the funds to secure your mortgage for a piece of property or your house. They actually work as a source of insurance stating that you will be reliable in paying back your loan. Since lenders have this guarantee they may be more willing to offer you financing or even give you a lower interest rate since your risk factor is much lower than many others.

Types of VA Loans

The VA will not give insurance for the entire amount of the loan but instead on a small portion of it. The threshold for the loan is if it is under $144,000 the VA will insure $36,000 and if it is over $144,000 the VA insures $60,000. This helps the banks in case you end up defaulting on your obligation to pay.

VA insured loans can be found in a number of locations. Mortgage companies, banks, credit unions, and savings-and-loans all offer them. The VA website will help you to discover where you can find a VA loan or even asking the bank or institution whether they have VA loans will work as well. There is no guarantee when it comes to a VA loan that the VA will agree to insure you or that the bank will offer financing to you. The VA loan is something that can help you get financing if you qualify though.

Advantages of VA Loans

One of the best advantages to a VA loan is that you don't always have to have a down payment. Most lenders require at least 20% of the mortgage as a down payment but since the VA is government insured many lenders are willing to allow you to purchase a home without this. Also, in most cases if you cannot come up with 20% of the cost but can still get approved for the mortgage you will be required to have private mortgage insurance until 20% of the home is paid for. You also avoid this with a VA loan.

VA loans also offer lower closing costs and other fees. Many of them are possible to be rolled directly into the amount of the mortgage. They can be quite flexible when it comes to payments and penalties for paying off early are nonexistent. Also, those individuals who have the possibility of defaulting may also be offered assistance to avoid this.

Should You Take a VA Loan?

The biggest downfall with a VA loan is that is takes longer than usual to process. Since the savings are so large it may be well worth it to wait. You should definitely consider a VA loan if you have the possibility of qualifying for it.

by: Lori English

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