Veterans serve their countries and sacrifice their lives for the protection of their country, so it's only right that there are programs in place that help them buy a home for themselves and their family. If you are a Veteran and have served your country, you could qualify for a VA Home Loan and may want to consider it as an option for buying the home of your dreams. VA Loans are a type of home mortgage that is explicitly reserved for active military members and veterans. In the United States and Canada, these VA Home Loans are guaranteed by the Department of Veterans Affairs, offered through participating banks or lenders. These VA home loans will allow veterans and active military members to buy a home easily with benefits that other loans may not include. These VA home loans are created to give veterans and military members affordable long term financing, often with interest rates lower than conventional loans. It allows the veteran, active military member and their spouse to buy, build, or repair a home for personal occupancy. The VA Home Loans include 100% financing on the value of a home.
Other perks include:
- No down payment is mandated unless a specific lender requires it or if the home price is above the assessed value
- Sometimes tax reductions are available
- Closing costs are limited and could even be paid by the seller
- Lenders cannot charge a prepayment penalty
- Assistance in avoiding default
- No need for perfect credit
- Can be a first time home buyer or a previous home buyer
- No penalties or fees for paying off the loan early
- Can provide help if mortgage payment issues come up
Who can get a VA Home Loan:
- Active-duty military members
- Reservists or members of the National Guard
- Surviving spouses of veterans
Types of VA Home Loans:
VA home loans, FHA loans and other loans that are insured by departments of the United States government. They have securitization which is the ability to turn assets into securities which are financial items that are bought and sold in financial markets much like how bonds and stocks are traded. The assets are pooled together and are then repackaged as interest-bearing securities. Then whoever purchases these securities receives interest and principal payments. The Government gains securitization through the Government National Mortgage Association (GNMA) which guarantees against default.
All applicants must obtain a Certificate of Eligibility (COE). This will show lenders that you meet the requirements to get a VA sponsored loan. You can apply for the COE online, through the mail or through a lender. Active duty military and National Guard members or Reservists who have never been in Active Federal service must have a current statement of service. Veterans and current or former National Guard members and Reservists that have been activated for Active Federal service must present a DD Form 214 which verifies their past service.
There are several types of mortgage loans to help veterans and their families:
- The Native American Direct Loan Program helps Native American veterans finance purchasing a home, construction of a home or improvement on a house that is on federal land. Lower interest rates are also available.
- A VA home purchase loan helps veterans buy a home at a competitive interest rate.
- Interest rate reduction refinance loans (IRRRLs) which allow you to get a lower interest rate by refinancing a VA home loan you already have.
- A Cash-out refinance loan lets mortgage holders borrow against home equity to pay off their debt, to make home improvements or to fund schooling. It creates a mortgage for a more significant amount and converts home equity into cash.
- Adapted housing grants assist veterans who have a complete disability related to their time in service. This will allow them to buy or build a home that will accommodate their disability.