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VA Home Loan

A VA loan is a type of home loan provided specifically to eligible military personnel, veterans, service members, National Guard members/reservists, and qualifying surviving spouses. This loan is provided by private lenders and the U.S. Department of Veteran Affairs guarantees the loan. Due to this fact, VA loans are widely available all across the US. The loan scheme was launched by the VA so as to assist eligible people get good terms on a mortgage loan and thus become proud home owners.

Qualifying individuals need to get a COE or certificate of eligibility from the VA to be able to apply for a VA loan from a private lender. The lenders of VA home loan offer different kinds of mortgages that cover a wide spectrum of home requirements such as construction of a single family home; purchasing a condominium unit located in a development approved by the VA, or a single family house, or a co-op home unit; refinance of a home mortgage; renovation, repair, or upgrade of the main home; purchase of a manufactured house and/or a lot; and creation of energy-efficient home enhancements such as solar cooling or heating systems.

VA home loans

VA home loans were initially launched in the year 1944 after the addition of this extra entitlements package to the Servicemen’s Readjustment Act for qualifying service members. The VA or the U.S. Department of Veterans Affairs oversee and administer these types of home loans. The loan money is not actually lent by the VA, but it guarantees such loans and reimburses the borrowed loan amount to the private loan lenders if borrowers default on the loans. As the VA guarantee offers a big safety net to the private lenders, VA home loans are available all over the country at an affordable rate.

Advantages of VA home loans

Some of the benefits of VA home loans are mentioned below:

  • Down payment is not needed. Down payment may be required if asked by the lender or if the buying cost of the house is greater than the relative worth of the house/property.
  • The rate of interest is negotiable
  • Information about reasonable value is provided to the home buyer
  • There is option to finance the VA funding charge. The funding fees are reduced when a down payment of not less than five percent is paid. Also, veterans who are getting VA compensation are exempt from the funding fee.
  • VA home loan borrowers do not have to pay mortgage insurance premiums.
  • The closing costs are as low as, or even lower, as compared to other kinds of financing.
  • An assumable home mortgage
  • In case of houses that undergo inspection by the VA at the time of construction, there is a warranty from the home developer as well as help from the VA to receive co-operation from the builder.
  • VA home loan borrowers have the right to prepay the mortgage without paying a prepayment penalty.
  • Veteran borrowers of VA home loans get assistance when they default on the mortgage because of temporary financial issues.
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