There is nothing more rewarding in the life of a military and war veteran than securing the future of his family. More than the awards and recognition bestowed, a veteran will surely want to see his family living comfortably in a home they can call their own. With the help of a veteran’s home loan, this dream is fulfilled.
Enacted into law as the Military Readjustment Act of 1944, the VA Home Loan, as it is commonly known, made it easier for servicemen to own their own home. This is accomplished by implementing a no down payment plan. This is the summary benefit of this type of home loan that is designed exclusively for veterans and their families.
Other advantages arise with a no down payment scheme. This means that a maximum amount can be allocated for emergency funds. And with the emergency funds, other home-related processes such as repairs and renovations can be financed, which would actually be difficult to achieve if the home to be purchased requires the traditional 20% down payment.
Even if you compare VA financing to other types of loans like FHA and conventional loans, the 3.5% down payment and 10% would still be tough to maintain an emergency fund for immediate needs.
The availability of a no down payment can instantly send great music to the ears of everyone who dreams of owning a home. However, this type of home loan is not for everyone. The basic guideline that governs it is that only eligible veterans, those on active duty, members of the National Guard, reservists, and surviving spouses of military personnel or veterans can take advantage of such a loan. The Veterans Administration (VA) enforces strict measures to ensure that only the qualified individual can take advantage of the funding. A VA certificate of eligibility must be obtained to ensure the borrower is qualified. Time consuming sounds! Not really, because the lender can help the borrower get this certification.
Another thing to know is that it does not apply to other types of homes than those that will be occupied by the borrowers. This means that investment homes or vacation properties are definitely off the list and will surely be a reason not to approve VA financing.
There must be a financing fee that the borrower will bear. The percentage varies depending on the borrower’s classification. For the borrower’s concern that there is not enough amount for the financing rate, there are sellers who are willing to take such and convert them into the loan. However, the borrower must be prepared to pay the financing fee, including its interest rate, along with the debt on the VA home loan itself.
