What is VA Loan and What are Its Advantages?
VA loans were first started in 1944 by the US Government. It is a military loan guaranty program that helps the returning service members to purchase their homes. It is actually a mortgage loan issued by the approved lenders such as Veterans United Home Loans and is guaranteed by the federal government. Today VA Loan program is more important than ever to the service members and since its inception this program has helped to place more than 20 million veterans and their families to have affordable home financing through its distinct advantages over traditional mortgages. It is no less than a life line for the military borrowers many of whom find difficulty when faced tough credit standards and down payment requirements.
While department of Veterans Affairs does not lend money for VA loans but it backs private lenders such as banks, saving and loans as well as mortgage companies to provide financial support to the veterans who qualify for the loans
Who are eligible for VA Loans?
Everybody is not eligible for this type of loan qualifications and you must be
- Active-duty personnel
- Reservists/National Guard Member
- Some surviving spouses
Major benefits of VA Loans
Like any other mortgage or loans VA loans require considerable amount of details and information to review. It provides military home buyers one of the most unique and powerful loan programs ever created. Some of the major benefits of this mortgage include:
- One of the major advantages of VA Loans is that it won't deny loan based solely on low credit score on the other hand it just looks at only the previous 12 months of credit history unless the bankruptcy, a tax lien or a collection situation like factors occur.
- To get this loan no down payment is required. This can save consumers up to 20 percent of the loan value as compared to traditional loans.
- VA loans do not require mortgage insurance premiums
- It has negotiable interest rates
- VA assistance is provided to veteran borrowers in default due to temporary financial difficulty
- Borrowers can refinance to a lower rate within the VA programs through the VA streamline Refinance loan without re-qualifying for the program
- If you compare the closing costs of VA loans with other types you found it much lower
- You can prepay VA loans without any penalty
- If the borrower has service related disability then they may qualify for the lender to waive the funding fee which further reducing the closing cost