VA Loan is a mortgage program offered by the United States Department of Veteran Affairs. What this program does is it sets the qualifying requirements and standards, dictates the terms of the mortgages offered, and guarantees a portion of the loan. One thing to note, however, is to avoid confusion: it does not provide the financing for the purchase of a home. VA home loans are available through private lenders such as banks and mortgage lenders.
Those who can apply for this loan program are veterans, service members, and the families of the veterans and service members. Those who buy a home using VA loans can buy their home with little to no down payment. So basically a VA loan is an aid offered by the US Department of Veterans Affairs to the veterans, military personnel and their families.
To help you confirm your eligibility for this loan, please check out Service Members Civil Relief Act Central Verification Service or SCRACVS. You can get military verification through SCRACVS. Their service is also useful for other services that require military verification. This includes default judgments, leases, security deposits, evictions, credit card interest rates, mortgage interest rates, mortgage foreclosure, car leases, life and health insurance, and more.
For those who qualify for VA loans, they can also take advantage of other housing-related programs, such as building, repairing, or modifying a home. This program is not exclusive to first-time home buyers. As long as you are qualified, you can apply. Qualified persons can also reuse the benefits and reassign the loan to another eligible person.
Here are some of the benefits you can expect when you apply for a VA loan:
- There is no down payment unless required by the lender. A down payment is usually only required if the purchase price exceeds the established value of the property.
- There is no premium requirement for private mortgage insurance.
- Little to no closing costs as it can be paid by the seller.
- The lender may not charge a prepayment penalty if the borrower pays off the loan early.
TYPES OF VA LOANS
- VA loans for buying a house that helps veterans, military personnel, and their families buy a home at a low interest rate and little to no down payment.
- Cash-out refinance loans allow qualified people to borrow against equity to pay off debt, fund school, or make improvements. This type of VA loan provides a new mortgage for an amount greater than the existing note and converts equity into cash.
- Interest Rate Cut Refinance Loans or IRRLs Help borrowers obtain a lower interest rate by refinancing an existing VA loan. This allows them to convert an ARM mortgage or a variable rate mortgage into a fixed rate mortgage.
- The Native American Direct Loan Program is focused on helping Native American veterans with their home purchase, construction or home improvement.
- Adapted housing allowances are focused on helping veterans with service-related disabilities buy, build, or modify a home, or modify or repair an existing home.