Home loans are not one-size-fits-all products. The priorities and circumstances of aspiring homebuyers vary widely, and a multitude of loan products with different terms and requirements have evolved to meet their needs. With so many options to weigh, smart borrowers tend to ask a lot of questions as they explore the possibilities for financing a home purchase. What are some common questions about VA loans?
Common Questions About VA Loans
Between the end of World War II and 1966, one in five of the single-family homes built in the U.S. were financed by the Department of Veteran Affairs’ home loan program, according to ArmyTimes. Today, the program has guaranteed more than 20 million home loans. Could a VA loan help you achieve your housing goals? Learning the answers to some common questions about VA loans may help you decide.
Who Qualifies for a VA Loan?
VA loans aren’t for everyone. Eligibility for this benefit is earned through service. Typically, the program is open to current military service members, veterans, members of the National Guard, and Reservists who have completed the necessary service. In some cases, their spouses and individuals who worked for certain organizations may also qualify. Before you can get a VA loan, you will need to obtain a Certificate of Eligibility. This document confirms your eligibility and provides the lender with other important information.
Where Do I Go to Get a VA Loan?
The VA doesn’t actually create loans. VA loans are made by private lenders, so if you are interested in using one, you’ll need to shop around for a private lender who offers VA loans (source). Why are they called VA loans if the VA doesn’t actually make the loans? The VA backs loans made through its loan program with a partial guarantee. That backing means that the government agrees to repay a portion of the loan should the borrower default on their mortgage. This reduces the risk that lenders take in extending the loans, which allows them to offer better terms to the borrowers who use them.
What Advantages Does a VA Loan Offer?
Why are VA loans so popular among eligible borrowers? As The Mortgage Reports makes clear, these loans offer some attractive advantages:
- VA loans can provide up to 100 percent financing, so no down payment is required as long as you meet the loan program’s requirements.
- VA loans come with competitive interest rates and favorable terms.
- Qualifying guidelines for VA loans are more flexible, so it’s easier to get approved.
- There’s no private mortgage insurance or prepayment penalty.
- Closing costs are lower because the VA sets limits on what a borrower can be charged.
- VA loans are assumable, which can make it easier to sell your home in the future.
- If you use a VA loan to purchase a home and later find yourself struggling to make your mortgage payments, you can reach out to the VA for assistance.
Are There Any Drawbacks to VA Loans?
Nothing is perfect. As The Military Wallet indicates, VA loans do have some potential drawbacks:
- VA loans can only be used to fund the purchase of an eligible borrower’s primary residence. They cannot be used to purchase vacation homes or investment properties.
- Some sellers are reluctant to accept offers involving VA loans because they mistakenly believe that these loans are more restrictive or more prone to problems than other loans.
- Not all lenders are familiar with the VA loan program’s ins and outs. An inexperienced lender may not know how to help a borrower get the maximum benefit from their housing entitlement.
Whether you have common questions about VA loans or uncommon ones, PrimeLending: Manhattan, Kansas, can help you find the answers that you need. We offer a wide range of loan products, including VA loans, and our team of friendly loan officers is ready to offer user-friendly explanations and expert guidance. We always listen carefully and offer personalized service as we help you explore your financing options and navigate the approval process. To get started, contact us today.