What is a VA Mortgage Loan?

What is a VA Loan?

VA Loans are mortgage loans moderated by the Department of Veterans Affairs, offered to veterans and their families. The loan finances up to 100% on the value of a property. The overall framework (rules and regulations) of a VA Loan is drawn out by the Department of Veterans Affairs, they also insure loans against defaulters thus eliminating mortgage insurance. But the loans are offered by private lenders such as banks, savings and loans, or mortgage companies, an applicant should typically chose a lender closest to their area of residence. The loan holds guarantee against default by the government, and falls under the Government National Mortgage Association. There are three types of VA Loans: purchase loans, interest rate reduction refinance loans (IRRRL), and cash-out refinance loans.

Eligibility

In order to qualify for a VA Loan, you should fulfill at least one of the following criterion:

Served 181 days during peacetime (Active Duty)

Served 90 days during war time (Active Duty)

Served 6 years in the Reserves or National Guard

Surviving spouse of a service member who was killed in the line of duty

Lenders also request a Certificate of Eligibility (COE) issued by the Veterans Association, or Form 26-1880 to ensure that an applicant qualifies for a VA Loan.

Requirements

An appraisal should be performed on the property, this is usually done by a VA approved appraiser in collaboration with the lender. Any issues brought up in the appraisal should be corrected in order to meet standards of a safe home. In short, the property has to fulfill VA Loan guidelines, making it important to chose realtors familiar with VA guidelines, to ensure that the property passes the appraisal.

Benefits of a VA Loan

VA Loans allows you to buy a house without any down payment, making it desirable from other loans.

It allows you to refinance up to 120% of your homes primary value.

You can borrow up to $1,500,000.

No mortgage insurance.

Fixed rate loans can be taken for 30, 20 and 15 years, while a ARM loan can be taken for 5 years.

A applicant can buy more than one property.

Fees

The terms, conditions and requirements of a VA Loan might seem daunting, but working to meet the criterion with the lender will make the process easy to render. VA Loans are monetized by the government and tax payers, thereby include funding fees to cover administrative costs of generating the loan. These loans charge a funding fee which helps towards dismissing down payments and monthly mortgage insurance. Surviving spouses and people with disabilities can have these fees waived, on applying for a exemption. The documents required are: VA Form 26-8937, VA notification of disability documentation, Certificate of Eligibility citing the surviving spouses (unmarried) entitlement. Further, the funding fees are not the same for all applicants, but differ according to the service and military status. These fees reduce considerably according to the percentage of down payment on the house, while the down payment is not mandatory, it does reduce funding fees.

Limits on the Loan

According to VA Loans terms and conditions, the maximum cap on loans have not been stated explicitly, but counties impose limits on the maximum guaranty amount. The VA also cites limits on the liability of a loan to particular applicants, which indirectly sets boundaries on the amount a lender is willing to provide. In general, veterans or military personnels can avail loans up to $417,000 with zero down payment, but this can increase in certain counties.

How to Apply for a VA Loan?

Veterans, military personnel's and their families can opt for a VA loan by fulfilling the following criteria's:
1) Consult the VA website to ensure you fulfill all the requirements laid out to qualify for a VA loan. If you fall short, the next step would be to consult a financial counselor at the Department of Veterans Affairs for possible solutions that might help you meet the criteria's set forth to qualify for the loan.
2) Find a lender engaged in the VA home loan program in your area, after consulting extensively with different lenders. A good VA lender should work seamlessly through the entire process and provide the best mortgage rates.
3) Procure a Certificate of Eligibility from the VA, the certificate will establish record of your military service, and qualify you for the loan.
Visit Certificate of Eligibility to find a detailed framework of the documents you would need to apply for a Certificate of Eligibility through eBenefits. Further, a lender can apply for one by representing your application on your behalf.

Defaulting on payments

If a veteran is unable to meet the terms of payment on the mortgage, foreclosure might be eminent for other loans but with a VA loan, counselors from the Department of Veterans Affairs, negotiates with lenders on plans for repayment, revision of the terms of the loan and other alternatives.

Finding a reliable VA lender

Veterans and military personal can find a reliable VA Loan lender by consulting and understanding plans offered by different lenders. Future, posing queries to recipients of VA Loans would help you immensely on taking the final step in opting for the loan. For more information on the finer details of VA Loans, visit VA Home Loans.