Veterans Programs To Help In Purchasing A Home
The primary benefits for veterans in the military are provided by The United States Department of Veterans Affairs (VA). The VA is an agency of the federal government that provides benefits, health care, and cemetery services to military Veterans. The VA also provides mortgage assistance for initiating a loan when trying to buy a house and refinancing options for a pre-existing loan. There are 2 categories for VA loans in order to purchase a home: VA direct and VA-backed home loans.
- Direct home loan: the VA serves as a mortgage lender. With the ability for better loan terms than other private lenders (mortgage companies, banks, or credit unions).
- VA-backed home loan: loans are facilitated by a private lender and backed by the VA. What it means for a loan to be VA-backed, in the case of a foreclosure, the VA will pay for a portion or all of the losses for the private lender. If the loan is $200,000 and the money that was recouped from foreclosure was $150,000, the VA would either pay a portion or all of the $50,000 that was lost. VA-backed loans reduce the risk for private lenders, allowing the companies to give more favorable terms.
What sets VA loans apart from other traditional loans is the ability to pay zero percent down payment for either a VA direct and VA-backed loan. In fact, nearly 90% of all VA-backed home loans are made without a down payment. There are other zero percent home loans available, such as the United States Department of Agriculture (USDA). Unlike the USDA, if one is able to qualify for the VA loan, they are able to get a zero percent down loan with no private mortgage insurance (PMI). There aren’t any other standard loans that offer those impeccable terms.
VA has a specific loan type for veterans who are Native American or married to a Native American called the Native American Direct Loan (NADL). They have competitive benefits for buying, building, or improving a home on federal trust land.
VA has ideal options for refinancing a pre-existing mortgage; either to lower the interest rate of the current loan or take a cash-out equity option. The cash-out refinance option allows the borrower to take out the equity in their home to pay off other debt, pay for school, pay for house projects, etc. In some cases, with the cash-out refinance loan, one can take out the total amount of the equity in their home.
Lenders follow the VA standards when making VA-backed home loans. They may also require individuals to meet additional standards before giving the loan. These standards may include having a high enough credit score or getting an updated home appraisal (an expert’s estimate of the value of the home).
VA, along with other non-conventional loan types, are not always accepted by sellers. Government loans tend to have stricter requirements for a home’s property conditions, it is crucial to have a real estate agent check which loan the seller is willing to accept.
https://www.va.gov/housing-assistance/home-loans/loan-types/