The VA Loan is a mortgage loan program offered by the United States Department of Veterans Affairs. What this program does is that it sets the eligibility requirements and standards, dictates the terms of the mortgages offered, and secures a portion of the loan. One thing to note however to avoid confusion, it does not provide financing for the purchase of a home. VA home loans are available from private lenders such as banks and mortgage companies.
Those who can apply for this loan program are veterans, military personnel, and families of veterans and military personnel. Those who buy a home with the help of VA loans can buy their home with little or no down payment. So basically a VA loan is assistance offered by the US Department of Veterans Affairs to veterans, service members, and their families.
To help confirm your validation that you are eligible for this loan, you can consult Civil Relief Act Service Members Centralized Verification Service or SCRACVS. You can get military verification through SCRACVS. Their service is also useful for other services that require military verification. This includes default judgments, leases, security deposits, evictions, credit card interest rates, mortgage interest rates, mortgage foreclosures, auto leases, life and health insurance. , etc.
For those who are qualified for VA loans, they can also benefit from other housing related programs such as building, repairing or adapting a house. This program is not exclusive to first-time home buyers. As long as you are qualified, you can apply. Eligible people can also reuse the benefits and assign the loan to another eligible person.
Here are some of the benefits you can expect when applying for a VA loan:
- There is no down payment unless the lender requires it. A down payment is usually only required if the purchase price is greater than the property’s assessed value.
- There is no private mortgage insurance premium requirement.
- Little or no closing costs as they can be paid by the seller.
- The lender cannot impose a prepayment penalty if the borrower prepays the loan.
TYPES OF VA LOANS
- VA Loans for Buying a Home that helps veterans, military personnel and their families buy a home at a low interest rate with little or no down payment.
- Cash-out refinance loans allow qualified people to borrow against the equity in their home to pay off debts, finance their education or make improvements. This type of VA loan offers a new mortgage for an amount larger than the existing note and converts the home equity into cash.
- Interest rate reduction refinance loans or IRRLs help borrowers get a lower interest rate by refinancing an existing VA loan. This allows them to convert an ARM or variable rate mortgage to a fixed rate mortgage.
- The Native American direct loan program focuses on assisting Native American veterans in the purchase, construction or improvement of their homes.
- Adapted housing assistance focus on helping veterans with a service-related disability buy, build or adapt a home, or modify or repair an existing home.