The VA Loan is a loan guaranteed by the U.S. Department of Veterans Affairs. In 1944, President Franklin D. Roosevelt signed the GI Bill of Rights of which the VA Loan was a part. The Bill is also known as the Servicemen's Readjustment Act.
Lending Limits
In 2009, if you are a veteran in the U.S. and meet the eligibility criteria, you can apply for a normal VA Loan with $0 down payment up to the VA Loan Maximum in qualified counties like New York, Alabama, Utah, Virginia and many more.
Who offers VA Loans?
These loans are offered by:
- Organizations providing loans
- Banks
- Private lenders
- Other financial institutions
Features
VA Loans have certain specific features. If you want to take such a loan you need to be aware of them. Here is a look at specific VA Loan Features:
- Veterans can take buy a house on VA Loan for living there, not for renting out. The lender is protected against financial loss if you are unable to pay the loan in the future
- You need to be an eligible veteran to get the loan
- A unit in a cooperative, a town-house in a project that has VA approval or a home can be bought
- The lender charges 1% and reasonable discount points
Types
VA Loans can be of many types. Here is a look at what they are, so that you can select one that is apt for your requirements:
- VA home loan - for buying a new home
- VA loan for refinance - for payment of real estate debts
- VA construction loans - for new constructions
- VA streamline refinance - for lowering interest rates
- VA adjustable rate - for buying homes with lower monthly loan payments. It has a fixed interest rate for the first few years which then involve yearly adjustments
Advantages
Taking a VA Loan gives certain benefits:
- Many uses, including refinancing
- Loan is federally guaranteed with no down payment
- No private loan monthly insurance needed
Eligibility
If you wish to avail a such a loan, you need to satisfy certain criteria. Here is a look at what they are:
- Veterans who were on active duty in the Navy, Army, Marine Corps, Air Force, or Coast Guard and were discharged with honour
- Were present for at least 90 days during wars and 181 non-stop days during peace
- For a National guard, the time period is six years
- An officer who started serving after October 16, 1981 or after September 7, 1987, the time requirement is a 2 years.
- Member of the Selected Reserve for more than 6 years
- U.S. citizens who fought on behalf of governments who were friends of the U.S. govt. in the Second World War
- A couple of years after being discharged of bankruptcy filed under Chapter 7 and instantly after filing under Chapter 13 given that your payments are on time and have been verified for a year.
- Foreclosure, if any, more than 2 years back.
- Officers of National Oceanic and Atmospheric Administration, member of Public Health Service officers, cadets at service academies etc.
Other criteria include great credit report, timely payments against credit for at least a year, less debts, liquid assets, military benefits, stable employment history, proper payments/clearance of federal debts and so on.
Pre-qualifying for a VA loan always helps, by giving you the required confidence.
What documents are needed to get this loan?
Following is a list of documents needed from those wanting to get a VA Loan:
- VA Form 26-1880 is a Request for a Certificate of Eligibility.
- DD-214 means 'discharge papers'. If you don't have it, you can send a 'Request Pertaining to Military
- Records' by filing the SF-180 form.
- Social Security numbers
- Bank details
- Other loan information
- Asset Details
- Monthly Income etc.
- Residence address for the last 2 years and so on.
What is the assured amount in VA Loans?
Those availing a VA Loan will get the following assured amount:
- 25% of the home loan is guaranteed under VA loans when the latter is within $104,250.
- The funding charges and the lesser of the two - the purchase price and the money the property is worth - are lent under this loan scheme.
Costs incurred in getting a VA Loan
The veteran needs to bear the following expenses related to a VA Loan himself. Here is a look at what kind of costs are involved in getting a VA Loan:
- VA Funding fee
- First-time inspection money
- Payment for your credit report that the lender receives
- Fees and taxes related to the recording process
- Some percentage of taxes, assessment fees; initial deposit for insurance including title insurance and tax.
- Money towards insurance for unforeseen natural disasters and title examination
- Certain charges if refinancing loans is there
Disadvantages
Those thinking of getting a VA Loan should also be aware of it's drawbacks like:
- Closing costs are not generally covered. You have to make special arrangements if you want the same.
- No assurance that your home is the best you can get!
Check out Cave Creek Realty. You can also consider Casa Grande Realty for attractive new properties.
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