The United States Department of Veterans Affairs provides a loan guarantee service to honorably discharged veterans of the United States Army. Basically, any military man or their surviving spouse is eligible for 100% financing without a down payment or mortgage insurance or a 90% refinance on an existing home.
How exactly does a VA loan work?
The VA loan is not issued by Veterans Affairs. Instead, the loans are issued by private lenders like banks and mortgage companies, but insured by VA. This means that if you do not repay your loan, Veterans Affairs will guarantee or insure it. This often translates to lower down payment requirements and eligible interest rates.
What else does the VA loan program do?
The Veterans Affairs loan program also provides pre-purchase counseling. VA officers will sit down with you and your families and go through the process of buying and owning a home, obtaining financing, and basically understanding the homeownership process.
Does the right to a VA loan guarantee a mortgage?
Unfortunately, no, it doesn’t. The Department of Veterans Affairs cannot force a lender to issue a home loan, but it can help you be a more attractive beneficiary. You must still meet basic credit and income requirements. But if a lender is concerned, for example, about a veteran’s poor credit history, the loan may still be denied or offered at a higher interest rate.
How much are veterans entitled to under the VA loan program?
The basic fee is $ 36,000, but this varies by region, median home prices, and the amount required. While the amount changes annually, the limit for the Continental US in 2008 was $ 417,000. Consequently, a qualified veteran could obtain a mortgage with no down payment in the amount of up to $ 417,000.
What do I need to get a VA loan?
You need a certificate of eligibility. You can get one from your lender or from the Department of Veterans Affairs. The latest information from veterans is stored in an online database known as ACE (Automated Certificate of Eligibility), so lenders can access this database to find out if a borrower has a certificate.
How do I get a VA loan?
First, you must select a home and sign a purchase agreement that is contingent on receiving a VA home loan. Next, you must choose a lender and complete a loan application with your Certificate of Eligibility. The lender will then contact Veterans Affairs to assign an appraiser to determine the market value of the home.
Once a Certificate of Fair Home Value has been issued, your lender will inform you that it has been approved for your loan. At that time, you will attend the closing where the lender or your attorney will explain the terms of the loan and you will sign the loan agreement.
After signing, the loan is sent to Veterans Affairs for collateral, at which point your Certificate of Ownership is noted and sent back to you. Finally, once all the proper approval has been done and the paperwork has been signed, you move in.