Memorial Day 2015: What You Should Know About VA Loans

Posted by Laine Smith on 5/25/15 10:24 AM

Topics: Home Buying

Service men and women and their families make many sacrifices to keep our country safe. As a token of appreciation, the United States Department of Veterans Affairs has provided a program with a mission to help servicemen, servicewomen, veterans, and eligible surviving spouses become homeowners.

MEMORIAL_DAY_2015

VA home loans, formally known as the VA Home Loan Guaranty Program, are provided by private lenders, like Compass Mortgage, and guaranteed by the U.S. Department of Veteran Affairs. The VA created the loan program in 1944 to help level the playing field for veterans who were not able to build a financial nest egg while in the service. Since its creation the VA has guaranteed over 18 million homes.

Benefits

The ability to purchase a home without a down payment is arguably the biggest benefit of a VA loan. Nine out of 10 VA borrowers purchase without a down payment. Veterans also benefit from:

  • No mortgage insurance premiums
  • Right to pre-pay without penalty
  • VA rules limit the amount borrowers can be charged for closing costs
  • Lower interest rate, in most cases
  • Financing available for first-time and repeat homebuyers

Another advantage of VA financing is their mission to not only help veterans purchase a home but maintain their mortgage, as well. Prudent underwriting and income requirements give lenders and the VA a greater sense of what a borrower can afford.

Though the VA does not set restrictions on how much a borrower can finance, there are limits on the amount of liability the VA can assume. This typically affects that amount an institution will lend you. To view limits set in your county, visit www.benefits.va.gov/homeloans.

Eligibility

To be eligible for a VA-guaranteed loan, you must meet certain credit and income criteria and provide a valid Certificate of Eligibility (COE). To obtain a COE, you must have been honorably discharged and meet certain service requirements.

You may be eligible for a VA loan if any of the following apply:

  • You served 181 days during peacetime (active duty)
  • You served 90 days during wartime (active duty)
  • You served 6 years in the Reserves or National Guard
  • You are the spouse of a service member who died in the line of duty or because of a service-connected disability

If you have questions about your eligibility for a VA home loan as a service member, veteran or spouse, please contact one of our mortgage bankers for more information.

Looking for more information on homebuying? Our Mortgage 101 Handbook is the ultimate guide for first-time homebuyers.

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