Veterans loans help those who have served our country. These loans make it possible for veterans to acquire financing backed by the U.S. Department of Veterans Affairs (VA). This financing has lower fees than a conventional mortgage and a low or down payment or no down payment at all. If you are a veteran or a service member currently on active duty, don’t forget to ask your lender if you qualify for a veterans loan, also called a VA loan, before purchasing a home. Additionally, it’s a good idea to get a preapproval letter so you know how much you can afford before you begin house hunting.
Who qualifies?
Veterans loans are made available to veterans, active-duty personnel, National Guard and U.S. Military Reserve members. To qualify, you must first obtain a certificate of eligibility. Service requirements are determined by the VA, and surviving spouses of veterans may also qualify for VA loans.
In addition to service requirements, lenders must evaluate applicants according to VA credit guidelines and standards. Veterans loans are not granted based on a minimum credit score; lenders are encouraged to consider other factors, such as a service member’s lifestyle and how it differs from that of a typical mortgage applicant.
To receive a veterans loan, you must be buying, building or refinancing a primary residence. You may also be able to receive special financing when making efficient upgrades to your home. This important VA benefit is not a one-time-only offer. Should you decide to sell your current home and buy another one, you can apply for another veterans loan and receive the same benefits.
How do veterans loans differ from conventional mortgages?
Veterans loans offer several advantages over conventional mortgages. No minimum down payment is required to purchase a home, which means you may finance any amount up to the total purchase price as long as it is not greater than the appraised property value. Unlike with conventional mortgages, private mortgage insurance, also known as PMI, will not be charged to those veterans purchasing a home with less than 20 percent down.
The VA also stipulates minimum property requirements to ensure the safety and soundness of the proposed home before purchase. After settlement, your bank or mortgage lender will receive a certificate of guaranty from the VA offering additional insurance in the event of your default. Those qualifying for a veterans loan also save on closing costs because the amount of fees charged by the lenders are limited.
Where do I apply?
Although program guidelines are set by the VA, traditional mortgage lenders provide the financing for veterans loans. Potential applicants should seek out lenders with expertise in this type of loan and who will be able to assist you with the home buying process. If you think you may qualify for a veterans loan, check out the VA website or ask you lender for additional information to ensure that you capitalize on the important benefits.
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