VA (Veteran Affairs) Home Loan Benefit
What is a VA Home Loan?
A VA Home Loan is a unique type of mortgage loan in the U.S. guaranteed by the United States Department of Veterans Affairs (VA). A VA Home Loan is meant to offer long-term financing to veterans and surviving spouses who wish to purchase homes.
VA loans are issued by private lenders such as; banks and mortgage companies to veterans as well as their surviving spouses (provided they don’t remarry). The VA loan program doesn’t impose any loan limits to eligible veterans but limits the guaranty amount to $424,100 as of 1st January 2017.
A VA loan comes with many other benefits. Below is a discussion of the most notable VA home loan benefits.
Veteran Affairs Home Loan Benefits
1. Easy eligibility for veterans, other military members, and surviving spouses
Almost all members of the U.S. military, veterans, National Guard members, and reservists are eligible for a VA loan. Surviving spouses of veterans and U.S. military members who die on duty or service-related disability can also apply.
An active-duty member can qualify for a VA loan after 6 months of service. National Guard members and reservists have to wait longer (six years) to apply. It is, however, possible for them to gain eligibility after 181 days of active duty or 90 days if active on foreign soil.
The application process is simple. Although potential borrowers need a certificate of eligibility to qualify, the mortgage process can be started without the certificate in hand. In fact, most lenders, like J.G. Wentworth Home Lending, get the certificate of eligibility for their customers during the loan preapproval phase. In a nutshell, VA loans are the easiest types of home loans to qualify for if you are a U.S military member, veteran or surviving spouse.
2. Higher limits
Unlike typical home loans, VA loans also come with higher borrowing limits. As mentioned above the Department of Veteran Affairs guarantees up to $424,100 (of the total loan) as of 1st January 2017. This is way higher than what most people get with regular home loans. Furthermore, you are free to borrow more.
3. No down payment
A VA loans also stands out because you don’t need any down payment. Unlike most conventional home loans which require approximately 5% or more down payment, you don’t need any down payment to get a VA loan. This makes a VA loan the perfect home loan for you regardless of your financial status.
4. Lower fees and rates
A VA loan also comes with lower fees and rates. First, conventional mortgage loans requiring less than 20% down payment must have private mortgage insurance. A Veteran Affairs home loan does not require monthly mortgage insurance of any sort which results in significant savings. Second, a VA loan often has a lower interest rates than a conventional mortgage. This is because the United States Department of Veterans Affairs guarantees the loan. Mortgage lenders find VA loans less risky which is why they are willing to charge lower rates.
5. Refinancing options
A VA home loan also stands out because you can refinance easily. Veterans Affairs offers two main refinancing options. One, you can refinance your VA loan to reduce your interest rate and/or term. Two, you can refinance to take cash out. Refinancing is possible if the value of your home value has increased, you have paid down your balance over time, interest rates go down, or you are looking to reduce the amount of payments remaining.
There are many reasons for taking out a Veteran Affairs home loan as seen above. If you’re a veteran, military member or surviving spouse (of a veteran) looking for a mortgage, a VA loan is the best home loan for you. Besides being able to apply for a VA loan fast and easy, you also stand to enjoy higher limits and lower costs. Also, VA home loan borrowers don’t need any down payment. They also stand to enjoy benefits like refinancing to lower interest rates even further as well as get money for other needs if the value of their home increases.
What more would you ask for in a home loan?
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