Veterans Will Want to Check Out VA Loans
By: Karen Bellas
Lenders offer a unique home loans which are guaranteed by the Veterans Administration (VA) to US Armed Services veterans who have diligently served this country.
Are You are Eligible for a VA Loan?
Listed below are most of the various qualifications options for eligibility for this benefit offered by the VA. Wartime veterans who served a minimum of 90 days and were not dishonorably discharged are eligible. Veterans who served during peace time need to have at least 181 days in if they served prior to Sept 7, 1980 or at least two years after that date and be honorably discharged. Those serving in the Reserves and National Guard for at least six years and are still serving or have been honorably discharged are also eligible. Surviving spouses of eligible persons who died as the result of service or service-related injuries and have not remarried may also be eligible. (Call or e-mail your local VA office for other questions regarding eligibility.)
Prior Certificate of Eligibility from the VA Not Always Necessary
Many veterans will be able to get an Automatic Certificate of Eligibility (ACE) through their lender via the internet. The VA has entered sufficient information about some veterans in their on-line database, which make the ACE possible. If your records are not entered, go to the VA website and get the VA Form 26-1880. You can fill it out and send it in along with your DD Form 214, if you served in the military after 1979. Check the website to learn the documentation for prior service. Having this certificate does not guarantee the bank will approve your credit application, you must still qualify financially according to their requirements.
Limitations on VA Loans
VA home loans can only be used to finance your primary residence within the United States or its territories. VA loans can also be used for home refinances as well as some kinds of home improvements as long as you haven't borrowed the maximum amount allowed. You need to check on the maximum amount allowed in your area. The loan limit for 2008 is $417,000 ($625,500 for Hawaii, Alaska, Guam and U.S. Virgin Islands). Qualifying veterans can get a no down payment loan for these maximum amounts.
The Government Requires Payment of a Funding Fee
The amount of the fee is two percent of the loan amount or 2.75 percent for reservists which must be paid when you close your VA loan. However, you can ask that this be included in the loan (as long as you are under the maximum). A down payment of at least five percent will reduce this fee. These fees fund the VA home insurance fund which benefits your fellow servicemen.
Advantages of VA Loans
Typically, veterans can get 100% financing with no down payment required. VA loans are guaranteed so there is no Private Mortgage Insurance (PMI) required which can be a savings of over $50 per month. Also, there are no penalties if you prepay the loan. Competitive interest rates are available. Finally, loan qualification may be slightly easier than if you were applying for a conventional loan. Sellers may be required to pay all closing costs. Nearly every lender offering FHA loans also makes VA loans.
Disadvantages of VA Loans
Sellers may be cautious to work with a buyer who is acquiring a VA loan as they used to take longer to process than traditional loans. However, obtaining a VA loan today takes only a little longer than a conventional loans. Sellers are often asked to pay a portion of closing costs, so be aware of that when negotiating the sales price of the home. The guaranteed maximum may make this not feasible in some markets.
If you meet all of the qualifications, give it a try.
Check out our Oak Park Real Estate in San Diego California
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