VA guaranteed loans are made by lenders and guaranteed by the U.S. Department of Veteran Affairs (VA) to eligible veterans for the purchase or refinance of a home. The guaranty means the lender is protected against loss if you fail to repay the loan. No down payment is required on a VA guaranteed loan and the borrower usually receives a lower interest rate than is ordinarily available with other loans.
Other benefits of a VA loan include:
Negotiable interest rate, discount points can be paid to buy down the interest rate; discount points can be paid by the seller!.
Closing costs comparable – and sometimes lower – than other financing types.
No private mortgage insurance requirement.
Right to prepay loan without penalties
Mortgage can be taken over (or “assumed”) by the buyer when a home is sold.
Counseling and assistance available to veteran borrowers having financial difficulty or facing default on their loan.
A veteran may use a VA loan more than once, if a veteran sells a home with a VA loan, he may use another VA loan to purchase the next home.
The seller is allowed to pay ALL the closing costs on behalf of the Veteran; and even allowed to pay down the veteran’s debts to help them qualify!
Although mortgage insurance is not required, the VA charges a funding fee to issue a guarantee to a lender against borrower default on a mortgage. The fee may be paid in cash by the buyer or seller, or it may be financed in the loan amount.
A VA loan can be used to buy a home, build a home and even improve a home with energy-saving features such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/ caulking, storm windows/doors or other energy efficient improvements approved by the lender and VA. An EEM (Energy Efficient Mortgage) may be used in conjunction with a VA loan,at the same rate, and no extra qualifying.
A Certificate of Eligibility and DD214 from the VA must be presented to the lender to qualify for the loan. Active duty Military can also take advantage of this program. Good credit history, good qualifying income are required as in conventional financing. Horizon Financial Associates is a great supporter of Veterans and strongly encourages all Veterans, especially recent veterans of Iraq and Afganistan to take advantage of this veteran’s benefit they have earned.