Author: Karen B
Secured by the Veterans Administration (VA), these guaranteed mortgages are obtained through banks and other private mortgage companies by veteran of the U.S. Armed Services. These loan guarantees protect the lender's investment should the borrower default so providing stimulus for lenders to loan to veterans.
Are You are Eligible for a VA Loan?
Here are the qualifications for eligibility for this VA benefit. 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 if they served prior to Sept 7, 1980 or at least two years after that date and be honorably discharged. Those who served 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 in service or from service-related injuries and have not remarried may also qualify. (Call or e-mail your local VA office with questions regarding eligibility.)
Get a Certificate of Eligibility from the VA Before Applying for a Loan
In order to make an application for a VA loan you must have a Certificate of Eligibility from the Veterans Administration. You can obtain this from the VA website by downloading VA Form 26-1880. Fill out this form and send it in along with your DD Form 214 documenting your service, if you served after 1979. This certificate does not guarantee the bank will approve your credit application, you must still qualify financially. Some veterans will be able to get an Automatic Certificate of Eligibility (ACE) through their lender via the internet, if the VA has entered sufficient information about the veteran in their database.
Restrictions on VA Loans
A VA home loan must be spent on your personal home within the United States or its territories. They can also be applied to home refinances as well as certain types of home improvements. You will also find there is a funding fee of two percent of the loan amount or 2.75 percent for reservists must be paid when you close your VA. This can be incorporated into in the loan. If you can make a down payment of at least five percent, this fee will be reduced.
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. There are also competitive interest rates available. Finally, loan qualification may be slightly easier than if you were applying for a conventional loan, because of the guarantee. Nearly every lender offering FHA loans also makes VA loans.
Disadvantages of VA Loans
Sellers may be cautious to negotiate with someone who is acquiring a VA loan as there is a suspicion that they 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 qualify, a VA loan may enable you get in the house of your dreams.
Article Source: http://www.articlesbase.com/mortgage-articles/us-armed-service-veterans-are-eligible-for-va-loans-476546.html
