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VA Financing - A Good Deal For Veterans
More than 29 million veterans and service personnel are
eligible for VA financing. Even though many veterans have already used their loan
benefits, it may be possible for them to buy homes again with VA financing using remaining
or restored loan entitlement.
Before arranging for a new mortgage to finance a home
purchase, veterans should consider some of the advantages of VA home loans:
- Most important consideration, no down payment is required in
most cases.
- Loan maximum may be up to 100 percent of the VA-established
reasonable value of the property. Due to secondary market requirements, however, loans
generally may not exceed $184,000.
- Flexibility of negotiating interest rates with the lender
- No monthly mortgage insurance premium to pay.
- Limitation on buyer's closing costs.
- An appraisal which informs the buyer of property value.
- Thirty year loans with a choice of repayment plans:
- Traditional fixed payment (constant principal and interest;
increases or decreases may be expected in property taxes and homeowner's insurance
coverage);
- Adjustable Rate Mortgage-ARM (lower initial interest rate may
allow qualification for a higher loan amount. Annual interest rate adjustment is limited
to 1 percent and maximum increase in the interest rate over the life of the loan is capped
at 5 percent) .
- Graduated Payment Mortgage--GPM (low initial payments which
gradually rise to a level payment starting in the sixth year); and
- In some areas, Growing Equity Mortgages-GEMs (gradually
increasing payments with all of the increase applied to principal, resulting in an early
payoff of the loan.)
- For most loans for new houses, construction is inspected at
appropriate stages to ensure compliance with the approved plans, and a 1-year warranty is
required from the builder that the house is built in conformity with the approved plans
and specifications. In those cases where the builder provides an acceptable 10-year
warranty plan, only a final inspection may be required.
- An assumable mortgage, subject to VA approval of the assumer's
credit.
- Right to prepay loan without penalty.
- VA performs personal loan servicing and offers financial
counseling to help veterans avoid losing their homes during temporary financial
difficulties.
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