The Department of Veteran Affairsprovides a guaranty, backed by the U.S. government, on VA loans made by anyqualified VA mortgage lender protecting them from loss if the Veteran shoulddefault on the loan throughout the United States and its territories.
The Veteran Affair's (VA's) HomeLoan Program is for active duty military personnel, veterans and certainmembers of the reserves and National Guard.
The VA loan program provides anoutstanding product with benefits for those individuals who have served or areactively serving and meet the VA loan requirements. VA mortgage loans may beused for your primary residence only.
Benefits for obtaining a VAmortgage loan:
1. Mortgage loans for veterans at100% (no down payment) of the purchase price, unless purchase price is abovereasonable value (appraisal).
2. All closing cost may be paid byseller.
3. Negotiable interest rates
4. No Private Mortgage Insurance(PMI).
5. The mortgage "is"assumable by other qualified buyers, making the process of selling easier.
6. No prepayment penalties
7. You may finance the VA'sfunding fee
8. Assistance for borrowers inforeclosure or default due to temporary financial difficulty.
Drawbacks to a VA mortgage loan:
1. You may have to pay a fee tothe VA up to 5 percent depending on eligibility to acquire your mortgage loan(the average fee is 2%).
2. If you allow someone to assumeyour VA mortgage loan you will lose the ability to use your VA certificate ofeligibility until that mortgage note is paid off by the party assuming themortgage loan. "Your eligibility can be restored sooner if the buyer isalso a qualified veteran and is willing to substitute his/her availableeligibility for that of the original veteran."
Obtaining a VA loan with aBankruptcy:
1. If your bankruptcy wasdischarged more than two years ago, it may be disregarded.
2. If your bankruptcy wasdischarged within the last 1 to 2 years, the following requirements must bemet:
· You and/or your spouse musthave reestablished satisfactory credit, and
· The bankruptcy was caused bycircumstances beyond your and/or your spouses control (such as unemployment,medical bills, etc.)
3. If your bankruptcy wasdischarged within the past 12 months, it will generally not be possible todetermine whether your a satisfactory credit risks.
The basic entitlement for a VAmortgage loan is $36,000. For mortgage loans that exceed $144,000 on a purchaseor construction, additional entitlement may be available up to an amount equalto 25 percent of the Freddie Mac conforming loan limit for a single familyhome.
The conforming mortgage loanlimits for 2013 are $417,000 ($625,500 for Hawaii, Alaska, Guam and U.S. VirginIslands). This means that qualified veterans can receive a no down paymentpurchase up to these loan limits.
The veterans affair fee iscurrently just over two percent on no down payment loans for a first-time use.The funding fee for second time users who do not make a down payment is overthree percent.
The basic idea behind the higher fee for secondtime users is based on two reasons. One is the fact these veterans havepreviously used their benefit once already, and second they've had a chance toaccumulate equity or save money towards a down payment on their next house.