The government tries to provide some benefits to members who serve the country. Among the other benefits that are available, is the Department of Veteran Affairs loan program for homebuyers. VA loans are mortgage loans that are designed to offer long-term financing to all eligible veterans or their surviving spouses. In case you want a loan from a private lender and things are such that you can’t pay your lender then VA stands behind and guarantees that the lender’s money will be paid.
Not all are eligible for the VA loan. You will be required to have a certificate of eligibility to get a VA loan. The people who are eligible for a VA loan are as follows.
- Active duty personnel
- Veterans of different fields
- Some National Guard members
- Surviving spouses of persons who have died while on duty
- The spouses of personnel who are missing in action or taken captive
Some of the benefits of VA loans are as follows:
1. No down payments:
Under this program, there has to be no money down. The eligible buyers can finance 100 percent of a home’s price without making any down payment. Conventional loans have very high down payment requirements. They at least require 20 percent of the value of the house as down payment. Thus, a lot of people can not afford to take out these conventional loans. The advantage in case of VA loans is that they do not require any down payments.
2. Processed faster:
If you are a potential buyer then you must submit your application and request for an appraisal of the property. This should be done before obtaining a VA loan. Some lenders, who have the VA approval for processing automatically, can finalize a loan. They do not need to wait for VA to review the application or the appraisal.
3. Protection of the lender:
The VA guarantees that it will provide repayment of the loan in case the borrower can’t. Thus, the lender is safe from any loss in the event of the borrower not being able to pay. This attracts the lenders and so they help veteran buyers in getting better loans.
4. Lowers cost of the buyer:
In case of the VA loan, the funding fee is approximately between half and 3.3 percent. This may be included in the loan or is supposed to be paid out–of–pocket. The loan is designed in such a way that it is meant to reduce the cost for the buyer.
5. Flexible loan:
These VA mortgage loans are not only for purchasing homes. They can also be used to build a new house or buy land. You may also take the loan out to make improvements to an already existing house. Thus, there is flexibility when it comes to VA loans.