How Much Do You Know About Home Loans for Veterans?
Military veterans sacrifice a lot to protect the rest of us. As such, there are numerous federal programs that have been established to help them meet their financial goals. VA home loans are among them. A VA loan is a home loan for veterans, a loan with benefits that non-veterans usually don’t have access to.
If you are a veteran looking to buy a home, how much do you know about veteran home loans? There is a lot to learn. If you are willing to put in the time to research and ask questions, you might discover that a VA home loan is exactly what you need to get into that house you have been dreaming of.
VA home loans are made available through traditional lenders including banks and credit unions. But they are backed by the Department of Veterans Affairs (VA). This is to say that the VA protects lenders against loss in the event borrowers do not pay what they owe.
The loans are available to current and former members of the Armed Forces as well as their surviving spouses. To qualify, a borrower must FIRST obtain a certificate of eligibility (COE). A certificate proves that the lender meets the requirements for a VA loan.
Home loans for veterans are a bit different compared to traditional mortgages. For starters, most VA loans can be had without a down payment. Although it is not wise to go into a home purchase without a down payment, the VA understands that saving for a down payment is not always easy for military members.
Here are some of the other benefits typical of VA home loans:
- Comparatively lower interest rates.
- Lower or limited closing costs.
- No requirement for private mortgage insurance (PMI).
- The ability to refinance at a later date.
There are some other benefits that can vary from one mortgage product to the other. Mortgage Maestro, a Colorado mortgage broker based in Denver, says that any broker or bank loan officer can explain the benefits of a particular product when a borrower applies.
Just as with conventional home mortgages, there are multiple types of home loans for veterans. The most common VA home loan is a purchase loan. It is used to finance the purchase of a single family dwelling, a manufactured home, or condominium. Purchase loans can even be used to buy multi-family dwellings and multi-unit properties.
This suggests that veterans can take advantage of VA home loans to purchase investment properties. They can rent out as many units as they purchase, relying on monthly rental receipts to cover mortgage payments.
Another type of VA home loan is the refinance loan. A veteran homeowner can refinance an existing home loan to get a better interest rate and better terms. There is also the cash-out option. Cashing out involves taking a loan against the entire value of the house but receiving cash in an amount equal to the borrower’s existing equity.
If you are currently a member of the Armed Forces or a veteran, do not be afraid to ask your mortgage broker or lender about the VA home loan. If you qualify, a VA loan can help you buy that house you’ve been looking for.
The chances are fairly good that you’ll get a better deal from the VA than you would by going directly to a bank or mortgage broker for a conventional loan. VA loans exist to help people just like you. Take advantage of them.