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The Veteran Home Loan Program
If you are a Veteran chances are you are eligible for a VA home loan. While it may take a little extra effort to get this type of loan there are many benefits. For instance with a VA home loan there isn’t a required down payment and it’s easier to get qualified because the credit and income standards aren’t as strict as traditional loans. Additionally, VA home loans don’t have prepayment penalties if you want to pay off your loan quicker or refinance for a better rate. Finally, VA home loans don’t require private mortgage insurance, or PMI, because the government insures the loan for you.
If you are a Veteran the first step you need to take toward getting a VA loan is obtaining a certificate of eligibility. Even if you have qualified for a VA loan in the past you will need to get a new Certificate. Once you get the Certificate you can be prequalified for a home loan up to $417,000. However, certain states do qualify for higher loan limits depending on their housing markets. To determine what your limit may be you can visit the government’s site here (http://www.homeloans.va.gov/veteran.htm)
Once you have your certificate of eligibility then you can begin shopping for houses as you normally would. You will also decide on a lender in the traditional fashion. Once you’ve selected your lender though, you will provide them with your certificate of eligibility as well as a completed loan application. Your lender will gather your credit and income information and have a licensed appraiser determine the value of the property. This appraiser is not an official inspector and so you will still want to have a licensed inspector determine if there are any defects in the property.
Keep in mind it is still the decision of the lender to give you the loan or not. VA home loans are given by private lenders or mortgage companies. The VA simply guarantees it. So, while you don’t need as good of credit you still need reasonably decent credit to obtain the loan. After you are approved for your loan, you will close on your property and the loan will be sent to the VA for guaranty.
The VA does have some guidelines on how you can use the loan. Perhaps most importantly, the home must be for your own personal use. This means you cannot buy rental property with a VA loan. Also, the VA has certain income and credit standards that a lender must abide by. And finally, the home purchased must be within the United States. Finally, should you decide to sell your home after purchasing it with a VA loan you don’t need to sell it to another veteran. However, the lender or VA must be notified and requested to approve the assumer and grant the veteran release from liability otherwise the original borrower can be held liable if the new owner fails to make a payment.
If you are a veteran talk to your lender and check out the VA home loan website. The benefits that go along with a VA loan are well worth the extra time to investigate getting one.
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