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With short-term interest and
mortgage rates at unforeseen lows, now is not the worst time buy a
home, especially for veterans who have access to one of the most
borrower-friendly loan programs in the U.S.
Conventional loans’ security and benefits fare poorly compared to
those of
VA loans. They have
the lowest rate of foreclosure of any home loan on the market.
Interest rates are often far lower than conventional loans’, and 90
percent of borrowing veterans buy a home with no down payment. There
are even more upsides to VA loans that conventional loans can’t
match, such as:
-No need for private monthly mortgage insurance
-No penalty for pre-paying the loan
-Closing costs lower than other loan types
-Assistance to borrowing veterans in default
Given this bevy of advantages, it’s no wonder why VA loan volume was
up 80 percent in 2009. Veterans can use VA loans to buy or build a
residence, repair or improve a property, refinance an existing loan
and/or make energy efficiency improvements.
Veterans need to ensure they’re eligible for the VA loan program.
Meeting any of the following conditions deems a veteran eligible:
-Military members who’ve served 181 days on active duty or three
months during war time may be eligible.
-People who have spent at least six years in the National Guard or
Reserves.
-Spouses of those killed in the line of duty.
Filling out a
Certificate
of Eligibility, which just guarantees a veteran qualifies, is
the next step. The COE form can be found on the VA Web site.
Veterans should not let a history of bankruptcy or subpar credit
score discourage them from seeking a VA loan; they may still
qualify. In fact, more than 80 percent of VA loan borrowers would
not have qualified for a conventional home loan.
Qualified veterans can borrow up to $417,000 without a down payment,
and the government backs 25 percent of all VA loans in the unlikely
scenario that a borrower defaults. So for the maximum borrowed
amount, the government would cover $104,250. |
