VA or Veteran Affairs home loans have been increasing in popularity over the last year. In today’s economy it is tough to obtain a home loan. If you can qualify, VA loans are easier to come by and cheaper than conventional loans. VA loans also do not require a down payment, where conventional loans today typically require anywhere between 5% and 20% down.
VA loans are usually available to veterans and active service members that meet criteria for their time of service and terms of discharge. Reservists and National Guard members may also qualify for VA loans if they have served a certain length of time, generally six years and if they received an honorable discharge. In addition widows and widowers can apply for VA loans if the death of their spouse was in relation to their service. Spouses of a MIA or POW veterans are also eligible.
In order to apply for a VA home loan, the person applying for the loan must first receive a certificate of eligibility from Veterans Affairs. While in the past this was somewhat complicated to obtain, today it is fairly simple. In most cases a visit to your local veteran’s affairs office is all that is needed. Information is all computerized and can almost always be printed out immediately. The certificate will verify service and discharge criteria and list the maximum amount you are entitled to borrow under the program, which in most cases is $240,000.
The next step in the process is to begin to work with a lender. VA loan rates are available from most lenders, but many times it is best to work with a lender that specializes in these loans. VA loans are government backed and as a result are usually easier to qualify for and are cheaper.
To begin with interest rates can be ½% to 1% lower than conventional loans. Another added benefit is that holders of VA loans do not have to pay PMI or private mortgage insurance which is required on conventional loans when the loan is more than 80% of the home’s value. A final benefit of these loans is that the government has set limits on how much lenders are allowed to charge for closing costs, origination fees and appraisal fees.