If you are an active or former member of the armed forces and you served for tour of duty and were discharged honorably then you could apply for Federal VA Home Loan Program. Even reserves and National Guards are eligible for this if they have served for at least six years and were honorably discharged.
A VA Loan does not require down payment and is available for most. This could be a good option to go for as the government controls the appraisal fees, closing costs and originating fees that lenders can charge.
The other benefit of a VA loan is that you do not have to pay for a private mortgage insurance. The lender can not ask you one if you are applying for a VA loan.
In terms of interest rates, a VA loan is like any other loan. It follows the market trends. However, there are some cons associated with VA loans. Starting 1982, the Congress has started levying a one time funding fee. This fee can range from 11/4% to 3% depending on where it is the first loan and the veteran’s service. According to the Director of Loan Guarantee Services at the VA, the usual fee is 2%. This fee can be reduced if the veteran makes a down payment of at least 5%. If you are taking a refinancing loan, then this fee will be different. It would be anywhere from 0.5% to 3%.
It has been noticed that many purchasers usually finance this fee along with house which can have repercussions since the hidden costs increase.
Just because you can qualify for a VA loan does not mean that you should automatically go for it. You should take some time to shop around. However, if you are offered a good interest rate and do not have the money to make a down payment, then you should go for a VA Loan.
It has been noticed that those opting for VA loans are average middle class people and most of them are first time buyers; with only 9% of them being women.
A widow or widower of a veteran can also apply for a VA loan provided the spouse’s death was service related. Spouses of POWs can also qualify for VA loans.
The process of applying for a VA loan is like any other loan but you would have to obtain a certificate of eligibility. This certificated will verify the service and your subsequent discharge from service. It will also give an indication as to how much the veteran can borrow under the VA loan program.
Most VA loans guarantee a maximum amount of $240,000 but the ultimate amount dispersed is dependent on income, assets, debts and credit history.
More Articles :
|
