There is nothing more rewarding in the life of a military man and a war veteran than ensuring the future of his family. More than the awards and accolades given to them, a veteran will surely want to see their family living comfortably in a home they consider their own. With the help of a veteran home loan, this dream comes true.
Enacted as the Military Readjustment Act of 1944, the VA Home Loan, as it is commonly known, made it easy for the military to own their own home. This is achieved by implementing a no-down payment scheme. This is the summary benefit of this type of home loan that is designed exclusively for veterans and their families.
Without a down payment scheme, other advantages arise. This means that a monthly amount can be allocated for emergency funds. And with emergency funds, other processes related to the home, such as repairs and renovations, can be financed, which in reality would be difficult to achieve if the house to be purchased requires the traditional down payment of 20%.
Even if you are going to compare VA financing to other types of loans like FHA and conventional loans, the 3.5% and 10% down payment would still be hard to maintain an emergency fund for immediate needs.
The availability of a no-down payment can instantly send great music to the ears of everyone who dreams of owning a home. However, this type of home loan is not for everyone. The basic guideline is that only eligible veterans, those on active duty, members of the National Guard, reservists, and surviving spouses of military or veteran personnel can avail this loan. The Veterans Administration (VA) applies strict measures to ensure that only the qualified person can use the financing. A certificate of eligibility must be obtained from the VA to ensure the borrower is qualified. Sounds slow! Not really, because the lender can help the borrower to obtain this certification.
Another thing to know is that it does not apply to other types of housing other than those that will be occupied by borrowers. This means that investment houses or vacation properties are definitely off the list and will surely be a reason for the non-approval of VA financing.
There should be a financing fee that the borrower will bear. The percentage varies according to the classification of the borrower. For the borrower to worry about insufficient amount for the financing fee, there are sellers who are willing to take it and transfer it to the loan. However, the borrower must be prepared to pay the financing fee, including the interest rate, along with the VA home loan installments.