What are veteran home loans?
Signed by President Franklin D. Roosevelt in 1944, the GI Bill has arguably had one of the greatest impacts on the overall economy of the United States. The GI Bill established benefits for service men and women and their families. On such benefit were Veteran home loans. With the advent of Veteran home loans, homeownership became within the grasp of millions of American military members.
Now eligible for Veteran home loans are the approximately 25.5 Million Americans that have served in our nation’s armed forces. Veteran home loans are available to any former or present member of the Armed forces who has met the requirements. Veteran home loans are available to the widows of eligible veterans; Reservists and national guardsmen who have spent 6 years as a member of e reserve or guard unit. As well as current active duty service, or honorably discharged servicemen who have 90 days active duty service during wartime, or 181 continuous days of active duty service during peace time.
The guarantee afforded to the lender from the Department of Veterans affairs is just one benefit of Veteran home loans. Many of the lenders who provide the funds for Veteran home loans are more willing to lend to a borrower who might otherwise not qualify for a conventional mortgage, because of this guarantee offered by the VA. The VA guarantees up to 25% of the loan value not to exceed a total loan amount of $417,000(In most areas. In some higher cost areas this limit is raised to meet the demand of the individual market). The guarantee is to replace the usual assurances a lender may have by way of a down payment and is paid to the lenders in the event that the loan is defaulted on. Veterans who default on Veteran home loans must repay the VA for the amount of the guarantee before being eligible to reuse their VA eligibility for future Veteran home loans.
Commonly asked Questions
Is a down payment required for Veteran home loans?One of the largest benefits of Veteran home loans is that closing on veteran home loans can be done with as little as $0 out of pocket for a down payment and closing costs. This is a great benefit to veterans who don’t have sufficient savings for a more traditional down payment. You can get Veteran home loans to cover 100% of the purchase price of the home, Provided that you are purchasing a home at or below the VA loan limit ($417,000 in most areas) and in many cases have the sellers cover all of the closing costs. Can Veteran home loans be refinanced to a better rate?Yes of course! In fact Veteran home loans have options for refinance that most other types of loans do not. For example you can go through a streamline refinance or a “cash out” refinance with Veteran home loans. Both of these options allow you to get into a lower rate. What is a Streamline?Through a streamline you are able to drop the interest rate and usually the monthly payments in a process that is more simplified than a conventional refinance. Streamline refinances of Veteran home loans are a faster and much simpler refinance of your existing mortgage The streamline is also much less stressful for the borrower because of that simplified process. What are “Cash Out” Veteran home loans?A cash out refinance are Veteran home loans where you are able to receive cash at closing up to 90% of the value of the home. This is a great option for veterans looking to consolidate debt or make improvements to their home. Are Veteran home loans a fixed or variable rate?Veteran home loans can be either a fixed rate or a variable rate. The lenders that offer the Veteran home loans programs often have sorts of loan programs available. If your goal is to end up with a fixed rate make sure that the final loan closing documents are drawn up to reflect that. |
How do I qualify for Veteran home loans?You must of course be an eligible veteran or spouse of a deceased veteran. The qualification process is short and easy. You must have eligibility remaining with the VA for the Veteran home loans. To establish eligibility the lender will require a copy of the DD-214. In general, Most (not all) banks do not allow a Veteran home loans to be used on a second home or investment property. Therefore you must be planning to use the home as your primary place of residence. How much does my credit matter for Veteran home loans.To be eligible for Veteran home loans the Department of Veterans Affairs does not have a minimum credit requirement. However, credit is a consideration for the lenders that finance Veteran home loans. The lenders that provide the funds for the mortgage use credit to help determine the likelihood of a default on the Veteran home loans. They have found over time that those with lower credit scores are more likely to default on a mortgage. The credit requirements imposed by the lenders on Veteran home loans are generally more relaxed than those of a more traditional mortgage program. What are the Costs involved with a Veteran home loans?Veteran home loans do have associated costs involved. Some of these costs include the origination charges that are charged by the lender or broker for the application and processing of the loan, and any points that you as a borrower pay to the lender for a lower interest rate. Other fees include, the fees that your local government charges to record the Veteran home loans as well as the funding fee charged by the VA for all Veteran home loans. This funding fee varies depending on the type of transaction. 0.5% for a Streamline refinance, 2.15% for a purchase Veteran home loans, and 3.3% for a “cash out” refinance. Title insurance is also required on all Veteran home loans transactions. |
