In a military power such as the United States, veterans of the Armed Forces are among the most respected members of society. These are people who have given their time and service towards defending the country. Given that serving in the military comes with a lot of risk and is by no means an easy job, it is only right that veterans be given benefits during their time of service, and even after they have been discharged from active duty.
Providing these services for military veterans is the responsibility of the United States Department of Veterans Affairs, which is a division of the US Government. The VA is mandated by law to serve all veterans from all over the country, be they in California, Utah, or Florida.
Among the benefits that the VA provides is a home or mortgage loan. Here is everything you need to know about it:
What Makes VA Loans Different from Other Mortgage Loans?
Similar to mortgage or home loans, a VA loan is used to help servicemembers, veterans, and any surviving spouse purchase their own houses. Although they are also provided by private banks and lenders, VA loans are guaranteed by the US Government. As a result, they usually come with more favorable interest rates and payment options which help beneficiaries save a lot. It also allows those who might not necessarily meet the requirements of a conventional home loan to still have a chance at becoming homeowners.
As an added bonus, VA loans also do not require any form of down payment. While conventional loans might require you to pay up to 20 percent of the loan value upfront, this is not required for VA loans, making it easier to avail of for beneficiaries.
What are the Types of VA Loans?
There are many different loans to choose from under a VA Loan, each with its own eligibility requirements and uses. The most common option is the simple Purchase and Cash-Out Refinance Loan. The Purchase Loan allows you to purchase a home at a competitive interest rate, while the Cash-Out Refinance Loan allows you to take cash out of the home equity to spend on emergency and other necessary expenses, or on home improvements.
Another option is the Interest Rate Reduction Refinance Loan. This is for those who already have an existing VA Loan. Refinancing refers to the process of replacing an existing loan with a new one in order to obtain more favorable interest rates. Thus, this option allows those with an existing VA Loan to lower their interest rates.
Lastly, the Native American Direct Loan program is for veterans who are duly recognized as belonging to a Native American tribe. Availing of this can help reduce the interest rate on an existing VA loan, or help finance the purchase or improvement of Federal trust land.
What are the Requirements to Apply for a VA Loan?
Generally, in order to apply for a VA Loan, you must possess a valid Certificate of Eligibility (COE) that verifies to the private lender that you are eligible for a VA Loan. Furthermore, you must also have signed statements of service to prove that you are or were a member of the armed forces in good standing.
Your loan terms and monthly payments, however, will be drastically affected by your ability to pay the loan off. Thus, some veterans may receive a larger loan amount than others and with better payment terms as well. Other factors that determine your eligibility include length and character of service and duty status.