The VA Loan, which was established in 1944 by the GI Bill, assists veterans, active service members, and widowed military spouses in purchasing a home. VA loans are different from normal loans because they are guaranteed by the government, meaning that the government will repay part of the loan to the bank if you don’t make your payments. This assistance from the government means less risk for banks, so VA Loans are easier to get than standard loans.
To qualify for a VA Loan, you must fit into one of the following 4 categories: you are an active duty service member, a veteran who served 90 consecutive days during wartime or 181 consecutive days during peacetime, served more than 6 years in the National Guard or the Selected Reserve, or lastly be the spouse of a service member who died in duty.
VA Loan Benefits
1. No Down Payment Required- Most loans require you to make a down payment to buy a home. With VA loans, no down payment is required. Last year 50% of people that bought a home with a VA Loan bought it with no down payment.
2. Don’t have to pay Private Mortgage Insurance- On a normal loan if you make a down payment less than 20% you are required to pay mortgage insurance. You must pay mortgage insurance each month on top of monthly mortgage payment. Since VA Loans are protected by the government no Private Mortgage Insurance is required.
3. No prepayment penalties- There will be no repercussions if you pay your loan off early or decide you no longer want it and decide to sell it, and no restrictions on refinancing.
4. Limited Closing Costs- The VA loan limits the closing costs that lenders can charge. This is another way that VA Loan saves you money.
5. Foreclosure Avoidance- The VA makes a strong effort to assist homeowners in avoiding foreclosures. Last year the government successfully helped over 100,000 veterans avoid foreclosure and keep their homes. Even if you do have to foreclose your home you will be eligible for another loan in 2 years.
6. VA Loan Program for Life- One of the best benefits is that the VA Loan program is available for all eligible service members for their whole life, there are no 1 time use rules or anything like that. Once the loan is repaid in full, veterans are eligible
8z Mortgage is not endorsed or represented by the U.S. Department of Veterans Affairs.