While the G.I. Bill educated millions of military veterans, VA loans give them a step up on homeownership. Here are the basics of VA loans.
The Basics of VA Loans
Much like a HUD, the VA does not actually issue home loans to veterans. Instead, it makes home loans easier to get by guaranteeing that lenders will be repaid the full amount issued. This protects lenders from the risk of default on the loan.
In exchange for the VA guarantee, lenders provide easier loan processing and make it far easier to get into a home from a cost perspective. In many cases, the borrower will not be required to make a down payment or a nominal one if necessary. The borrower will also not be require to pay private mortgage insurance, which non-military borrowers typically must pay on loans made with less than a 20 percent down payment.
One potential downside to a VA loan is the guarantee amount. Currently, the maximum amount is $203,000. In many parts of the country, this figure is insufficient to buy a home. Veterans should contact their local benefits office to find out current guarantee amounts as the program is modified from time to time.
To obtain a VA loan, a person must meet a few general requirements. Obviously, they must have served in the military. Specifically, you must served in active duty during World War II or later and not have received a dishonorable discharge. Individuals serving during times of war must have put in at least 90 active duty days. Individuals serving during periods of peace must have put in 180 days. For veterans who served after 1980, the qualification time period is two years unless active duty occurred during either of the Gulf Wars. In such situations, the time period is 90 days. Obviously, it gets a bit confusing. Make sure to speak with your local office to determine your eligibility.
VA guaranteed loans are excellent financial products for purchasing a home. Every veteran should look to them first when contemplating obtaining a mortgage loan.
Sergio Haros is with Great Western Mortgage - San Diego mortgage brokers.
