Understanding Veterans Financing

There is nothing more rewarding in the life of a military and war veteran than securing your family’s future. More than the awards and accolades bestowed upon him, a veteran will likely want to see his family living comfortably in a home they can call their own. With the help of a veterans home loan, this dream is fulfilled.

Enacted into law as the Servicemen’s Readjustment Act of 1944, the VA Home Loan, as it is commonly known, made it easy for servicemen to own their own homes. This is achieved by implementing a plan with no down payment. This is the summary benefit of this type of mortgage loan that is designed exclusively for veterans and their families.

Other advantages arise with a scheme with no down payment. This means that a maximum amount can be allocated for emergency funds. And with the emergency funds, other home-related processes can be financed, such as repairs and renovations, which would actually be difficult to achieve if the house to be purchased requires the traditional 20% down payment.

Even if you compare VA financing to other types of loans like FHA and conventional loans, the 3.5% and 10% down payment would still be hard to maintain an emergency fund for immediate needs.

The availability of a no down payment can instantly send great music to the ears of anyone who dreams of owning a home. However, this type of mortgage loan is not for everyone. The basic guideline that governs it is that only eligible veterans, those on active duty, members of the National Guard, reservists and surviving spouses of military or veteran personnel can take advantage of such a loan. The Veterans Administration (VA) applies strict measures to ensure that only the qualified person can take advantage of the financing. A certificate of eligibility must be obtained from the VA to ensure that the borrower is qualified. Time consuming sounds! Not really, because the lender can help the borrower get this certification.

Another thing you should know is that it is not applicable for other types of homes than those that the borrowers will occupy. This means that investment homes or vacation properties are definitely off the list and will almost certainly be a reason not to approve VA financing.

There must be a financing fee that the borrower will bear. The percentage varies depending on the borrower’s classification. For the borrower’s concern that there is not enough amount for the financing rate, there are sellers who are willing to take such and turn them into the loan. However, the borrower must be prepared to pay the financing fee, including its interest rate, along with the VA home loan debt itself.