Whether refinancing or purchasing, many VA home loan borrowers don't concern themselves with where their funding comes from. However, understanding the VA Loan Guaranty Program and who funds VA loans can be helpful to VA-eligible borrowers.
A VA home loan might also be considered a VA "guaranteed" home loan. A certain amount of the mortgage loan is guaranteed by the federal government. The VA Loan Guaranty Service administers the home loan program within the Veterans Benefits Administration of the U.S. Department of Veterans Affairs. The money used to purchase or refinance homes doesn't come from any of these government entities; rather, a VA loan is originated and funded by VA-approved private lenders such as banks, savings and loans or mortgage companies.
VA-eligible borrowers can get VA mortgages as part of their veterans' benefits. VA loans help veterans and active military personnel to purchase and keep homes in recognition of their service to our country. Homes purchases with VA financing must be occupied by the VA-eligible borrower.
Advantages to VA loans over conventional loans may include the following:
o Equal opportunity loan
o Zero money down
o Appraised value available to buyer
o Negotiable interest rate
o Funding fee may be financed
o Equal or lower closing costs compared to other loan programs
o No private mortgage insurance (PMI)
o Assumable mortgage
o No penalty for prepayment
o Construction inspection comes with builder warranty and VA assistance to work with builder on any problems that are revealed by inspection
o VA counseling for veteran mortgage holders in financial distress
Most veterans and active military personnel who are VA eligible find that VA home loans are the best option for home loans. VA home loan requirements can be generally easier to qualify for because credit and income standards are less strict than those of other programs. In most cases, no down payment is required for a VA home mortgage. The fact that no PMI is required with a veteran home loan saves VA-eligible borrowers substantial amounts of money each month.
The already great benefits associated with VA home loans are even better thanks to the new law made by the Veterans Benefits Improvement Act of 2008 passed in October of the same year. The new law increases the VA loan guaranty to $729,750. And, for military personnel qualifying for a VA loan, up to100% of the appraised value of a home can now be refinanced.
The new VA loan guidelines help private lenders determine how much to lend. Lenders have to comply with VA income and credit standards; however, lenders can establish more conservative lending policies.
VA approved lenders must charge a lending fee as required by the Department of Veterans Affairs. The fee varies from zero to 3.3% of the loan total. The funding fee can be worked into the loan so the borrower still pays nothing down.
Veterans who are 10% disabled, or greater, as a result of active military service are exempt from the fee. Those not exempt can lower the fee by making a down payment.
VA loans are originated and funded by approved VA lenders and guaranteed by the U.S. Department of Veterans Affairs. Lenders must ultimately agree to the terms of each loan. For more information on VA loan programs please see the VA home loan guide.
No comments:
Post a Comment