Veteran Affairs Home Loans
The federal government offers many benefits to men and women who serve their
country. One of those benefits is the VA home loan program. The VA home loan can
be used to purchase a new home or refinance an existing one and is available to
all honorably discharged veterans and active duty military. The Department of
Veterans Affairs (VA) does not actually lend out money but they guarantee or
insure the funds that are loaned to you by a VA approved financial institution.
You can go to any bank or mortgage company that participates in the VA loan
program to apply.
The VA home loan offers several advantages over a conventional home loan. One of
the most significant benefits is that VA loans do not require a down-payment. As
of January 1st, 2006 you can buy a home for up to $417,000 with no down-payment.
While there are some conventional no down-payment home loan programs on the
market, you will have to pay a higher interest rate for the privilege. Not so
with a VA loan. You pay the same market rate whether you are making a 10%
down-payment or $0 down-payment. In addition, you will find that in most cases
the VA interest rate is comparable with or even lower than conventional loan
Another great benefit of the VA home loan program involves the loan closing
cost. While VA does not require the veteran to make a down-payment, there are
still loan closing cost as with any home loan program that the borrower incurs.
Closing cost usually average 3-5% of the loan amount. VA, however allows the
seller to pay all of your loan closing cost up to 6% of the loan amount. Compare
this to a 3% maximum seller contribution for most conventional loans. So with a
VA home loan it is possible for a veteran to buy a home for up to $417,000 with
no down-payment and without having to pay any closing cost. Talk about using the
power of other people's money to increase your net worth!
VA home loan participants also enjoy the luxury of not having to pay mortgage
insurance. In contrast, with a standard conventional loan you will have to pay
mortgage insurance if you put down less than 20% as a down-payment. Mortgage
insurance can add a significant amount to your monthly payment so not having to
pay this is really a plus to borrowers who use their VA loan benefit.
The Department of Veterans Affairs does charge a "VA funding fee" to all
non-exempt users of the va home loan program. The VA funding fee is currently
2.15% of the loan amount for first time VA loan users and 3.3% for subsequent
users who do not make a down-payment. This fee is added to the loan amount so
the veteran borrower does not have to pay it out of pocket at closing. If you
are a veteran with a VA rated disability and are receiving a monthly benefit
then, in most cases, you will be exempt from having to pay the VA funding fee.
If you are eligible for a VA loan and are in the market for a new home that is
within the VA lending limits then the VA loan should be your 1st choice when
considering your financing options. It offers tremendous benefits over a
conventional loan and can make you a homeowner with zero or little outlay of
cash. If you would like more information on the VA home loan program or are an
eligible veteran and want to get pre-approved for a VA loan visit 1st
Metropolitan Mortgage at http://www.MilitaryVALoan.com.