Posted by Admin | Posted in Articles | Posted on 05-07-2010
If you are looking into buying a home, you might want to take a good look at VA home loans because these loans have some advantages that other loans do not have. However, before you start looking into a VA loan, you have to see whether you meet the criteria.
To be eligible for a VA home loan, you must be an active or former Unites States Military member. There are specific times and lengths of time that you must have in service in order to qualify. Those who are on reserve duty or National Guardsmen must also meet certain time requirements. Your eligibility will also depend on the type of discharge you received when you were separated from the military.
Once you have determined your eligibility, you can make use of the advantages of a home loan. These include but might not be limited to:
No down payment to get the home loan.
Reasonable property value information.
Interest rates that are negotiable and perhaps lower than what the market is currently offering.
Financing of the VA funding fee (you may be better off not financing the funding fee).
Comparable or lower closing costs.
A mortgage that is assumable, meaning that you can sell and the buyer can take over the mortgage.
No prepayment penalty.
Assistance by the VA to borrowers who go into default because of temporary financial hardship.
No private mortgage insurance requirement due to VA guarantee.
All of the above factors make a VA home loan especially attractive. A person who looks into buying your home will know that they can take over the mortgage, especially if it is at lower interest rates than the ones currently being offered. The fact that you will not have a prepayment penalty will also make it easier for you to refinance or sell the house if you wish to do so.
You will also have less initial expenses because a down payment is not usually required for a VA home loan. However, a lender could request a down payment as a condition of the loan or you could be asked for a down payment if you are purchasing the home for more than the property’s reasonable value.
A word of caution about something that some people do not understand regarding VA home loans. The VA cannot guarantee that your investment is good and sound, nor can it provide legal services for you. The VA conducts an appraisal of the property but it should not be confused with a professional home inspection. The VA cannot guarantee that the house you buy will be free and clear of flaws and/or defects. If you are having the house built, the VA cannot force your builder to correct construction flaws. You must determine whether the house is sound through a good home inspection.
Even though it is the VA that guarantees the loan, you must still go through private mortgage lenders. The guaranty given by the VA protects the lender against losses if you cannot repay the loan, but the VA does not make the loan. The guaranty given by the VA usually takes the place of a down payment and PMI, which allows your financing terms to be just as favorable or even more so than any other mortgage loan.
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