VA loans are loans given to returning US service members and veterans. In more tragic circumstances, it can also be extended out to surviving spouses who qualify. The VA loan is part of a guarantee program provided by the US Department of Veterans Affairs – hence the VA. The loans in this program are privatized; some of its lenders consist of banks and mortgage companies, for example. Because of this, the VA doesn’t provide whole home loans. Rather, it grants purchases a portion, up to a quarter, of each mortgage to be paid. This acts as a lender safeguard. It protects the lender from the loss of the borrowed amount in case you, the borrower, are unable to repay the loan. That being said, the VA does offer a higher portion than most conventional home loans and has competitive interest rates. This also allows borrowers a great flexibility when it comes to buying, improving, or building their home.

So how do VA Loans work?

Home loans come with a lot of allowances. A borrower can buy a home or condo, build a home, repair or improve a current residence, refinance an existing home loan, or even refinance an existing VA loan to reduce the interest rate. VA loans can be used to purchase a house, townhouse, or condominium that you intend to occupy. These can be existing dwellings, or you can use it to build your own home. You can refinance your current loan using a VA loan if you are eligible. As well, VA loans may be used to make qualified improvements, such as insulation, storm windows or doors, or energy- efficient related features. VA loans are only open to specific types of housing, however. Those eligible are able to buy or build a residence that is considered a ‘move-in’ ready, primary residence. So this means apartments, condos, houses or anything with that vein. This also means no timeshares, vacation houses, or downtown lofts just yet. VA loans can be used to purchase a house, townhouse, or condominium that you intend to occupy. These can be existing dwellings, or you can use it to build your own home. You can refinance your current loan using a VA loan if you are eligible. As well, VA loans may be used to make qualified improvements, such as insulation, storm windows or doors, or energy- efficient related features.

What are the benefits of VA Loans?

VA home loans come with a number of benefits. One of which being there’s no need for a down payment on a loan. VA loans don’t come with mortgage insurance, limit buyer costs, and have no penalty if borrowers wish to pay their loan early. The lack of a mortgage insurance helps interested homeowners save money each money. Also, so long as you are fiscally responsible, you can use your VA entitlement repeatedly. Under certain circumstances, you may be able to obtain another VA loan even if you’ve lost one to a foreclosure or if you currently have one. Those eligible can also secure a loan even with a history of bad credit or foreclosures.

How am I eligible?

There are a few basic requirements that must first be met by the VA. As stated, VA loans are for returning veterans and service members. They will have had to have: – served 181 days on active duty during peacetime – 90 days on active duty during wartime – or served six (6) years in the Reserves or National Guard Surviving military spouses are also eligible for these loans if their spouse died in the line of duty or from a service related disability. Individual lenders might have an additional set of criteria for borrowers to meet, such as financial history.

How do I apply?

When the housing market crashed, the VA Home Loan program has since tightened its requirements, but applying works in the same vein as a conventional home loan would. Those interested can visit a VA approved back or financial intuition to apply for a loan. It’s also possible to extend home financing through the loan program at these facilities as well. There are income requirements and credit statuses that are regarded during the application process. It’s important to learn the specifics as they may very by state or personal situation. Be sure to keep up with the current table of funding fees and find out if you are exempt from these.

Are there any fees?

Actually yes. VA loans have what are called ‘funding fees’. Funding fees are about 2% of the total loan and are required for purchase and refinance loans. These fees go directly to the Department of Veterans Affairs; they’re also combined into the total loan amount and ensure that the program continues as it has for years. This also ensures that those eligible for a loan are guaranteed a $0 down payment. Borrowers will also have to cover closing and settlement costs. A portion of these fees must be paid up front. Take your time to learn more about VA funding fees and personal eligibility. Find a facility in your area and speak with a professional to help get you on the right track.