VA Home Mortgage Loans: Understanding 100% Veteran Financing Benefits
If you need a guaranteed home loan, requiring no down payment the Veterans Administration provides service men and women an opportunity for homeownership.
The Roosevelt Administration enacted the VA Home loan program eligible to veterans of the armed forces, reserves and special eligibility for surviving spouses. Eligible homeowners still must qualify for the loans through a private lender, but the VA guarantees a specific amount of the loan, making life easier for the lender and borrower.
VAHome.com shows the, 'VA will guarantee a maximum of 25 percent of a home loan amount up to $104,250, which limits the maximum loan amount to $417,000. Generally, the reasonable value of the property or the purchase price, whichever is less, plus the funding fee may be borrowed.'
According to a VA pamphlet, the loan guarantee provides veterans and eligible spouses no down payment unless the home price limits are not met. The VA secures competitive interest rates and an assurance to the lender of paying off all or part of the loan in advance.
During the home purchase process, the VA appraises the home to determine the Fair Market Value. The VA also requires compliance inspections on new construction to make certain the structure 'Meets accepted standards of good construction' and 'Conforms to the plans and specifications on which VA's appraisal is based.'
The VA will also try to assist with having the builder correct any defects if you have any complaints. The VA also offers a contingent plan for refinancing or home equity loans. The VA guidelines require the new loan to carry a lower interest rate than the initial loan. The VA also has a plan to make the new loan 'no money out of pocket.' In other words, the interest rate will be high enough for the lender to build in the loan originating costs.
The bottom-line for VA loans and refinancing: you must meet the eligibility requirements and a refinancing loan must have a lower interest rate than the original loan.
Author: Nick Ran
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