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  • VA Home Loan

    The federal government provides many advantages to veterans who serve the country. VA home loan program is one of those benefits. The VA mortgage can be used to refinance an existing one or buy a new home, and it is available to all discharged veterans as well as active duty military.

    The VA mortgage provides 100 percent financing for qualified members of the military, both active members and veterans to purchase their home. You become eligible for the funding if you have been serving in the military for three months during a wart, or six months during peacetime for members of the Air Force-Army, Marines and Navy.

    Besides, if you have served in the Army Reserve or National Guard, you may also qualify. If you are the spouse of a military service person who is either missing in action, is a prisoner of war or has died, you may qualify for this loan under certain conditions.

    It Is An Assumable Mortgage

     

    VA mortgage can be transferred to another party that would take over the responsibility for making the mortgage payments. The servicing lender would transfer the existing home loan from the current liable party to a new party. Through this mortgage assumption, you assume the seller's mortgage at its current interest rate, and you take over the installments.

    With a VA mortgage, there are two ways that you can take over your friend’s home loan.One of them is a simple assumption which is the transfer of the underlying property from your friend to you without the lender's approval. If you choose this option, your friend will still have liability until you pay the mortgage entirely. In case you fail to make timely installments payments, the property will go into foreclosure, where the seller will be held responsible.

    The other one is an assumption by novation where the buyer(you) of the property waits to receive servicing lender approval. It usually involves an application as well as acceptable documentation written by the borrower. You will then be released from all future responsibility and liability for the mortgage.

    VA Home Loan Benefits

     

    • It's A Government Guaranteed Loan

    It is a government insured loan. The government does not give you the funds to buy a home, but it promises the repayment to your lender in case of loan default. It means that borrowers can save significant amounts of money each month as there will be no need to include mortgage insurance to the principal amount borrowed for your home because the mortgage has the government guarantee of repayment.

    • No Down-payment Required

    One of the most significant advantages is that these loans do not require a down-payment. Even if there are some conventional no-down-payment mortgages on the market, you will be required to pay a higher interest rate for the favor which is different with a VA loan. You will pay the same market rate whether you are paying a ten percent down-payment or zero dollar down-payment. Also, the VA interest rate is lower than a compared to conventional loan rates.

    • No Closing Costs Involved

    Another significant advantage of the VA mortgage is that the program consists of the loan closing expense. VA does not require you to make a down-payment as opposed to other mortgage programs where there are some loan closing costs that you will incur. These costs usually take about three to five percent of the loan amount. However, VA allows the provider to cater for all your loan closing cost up to six percent of the loan amount. So with a VA mortgage, it is possible for you to have a home with no down-payment as well as without any closing cost payments.

    • Doesn’t Charge A Funding Fee

    The Department of Veterans Affairs or VA does charge a funding fee to all the users of this home loan. The funding fee is about three percent of the loan amount for first-time loan users and about four percent of subsequent subscribers who do not make a down-payment. The cash is added to the principal amount so you will not have to pay it from your pocket at closing. In case you have a VA rated disability, and you are receiving a monthly benefit, then, you can be exempted from paying the VA funding fee.

    If you are eligible for a VA mortgage and you are in the market looking for a new home which is within the VA lending limits, then this mortgage should be your first choice while considering your financing aspects. It provides tremendous benefits and also can make you a homeowner with a little or even zero outlay of cash.