Benefits of a VA home loan

Today approximately 25.5 million veterans and military personnel are eligible to take advantage of a VA Loan. A VA Loan can be used to build, repair or improve a home. Saving money is just one of the benefits of this loan. Veterans who take advantage of this loan are also more likely to receive a loan, because the VA home loan guarantee minimizes the risk of default for lenders. Other benefits include protections to make sure veterans are informed home buyers, to protect the home once it’s purchased and protect veterans if they fall on hard financial times.

 How to use a VA loan

 A VA home loan can be used to buy a home, a manufactured home, a condominium, and a lot for a manufactured home, according to the Department of Veterans Affairs. In addition, a VA loan can be used to build, repair or improve a home, including the addition of energy efficient improvements. Refinancing an existing loan is another benefit veterans can receive through a VA Loan. These loans are made through private lenders, such as, mortgage companies, banks and savings and loan associations. In order to receive a VA home loan you must apply directly to a lender. When a loan is approved the VA will guaranty a portion of it, based on the size of the loan.

 Lower monthly payments

 VA Loans have additional benefits that can lower your monthly payments, according to Conventional loans typically require the payment of private mortgage insurance, or PMI, for borrowers who pay less than a 20% down payment. This same insurance is not required by a VA loan. Also, VA loans generally have a 0.5% to 1.0% lower interest rate than a conventional loan. These two benefits can save you a great deal of money each month. For example, on a $150,000 loan an interest reduction of 1.0% would save you $94 and the PMI savings would amount to $115, resulting in a total monthly savings of $209.  Similarly, on a loan of $350,000 a 1.0% interest reduction would yield $220 in savings and the PMI savings would be $268 totaling $488 in monthly savings.

Benefits of a VA loan

* Equal opportunity: The VA fights discriminatory lending for all veterans.

* No down payment: A VA Loan is one of the only types of loan that is available with a $0 down payment.

* Buyer informed of reasonable value: Inspectors working for the VA will assess and inform you of the reasonable value of the home you wish to purchase.

* No mortgage insurance premiums.

* An assumable mortgage.

* Right to prepay without a penalty.

* Warranty: The builder will be required to provide a warranty and assistance will be provided by the VA .

* VA assistance to veteran borrowers in default due to temporary financial difficulty.

How to apply

To apply you can ask your lender to get a certificate for you from the VA’s secure web site. You can also fill out and submit a form to the Loan Eligibility Center in Winston-Salem, North Carolina. Veterans and servicemembers need to complete the VA Form-26-1880 and surviving spouses need to complete the VA Form-26-1817.