One of the fringe benefits that American servicemen and women can look forward to is the ability to buy their own home at an affordable cost. It is perhaps the least those who have served this country deserve, and whether a person is currently in the armed forces or is retired from it, the availability of VA mortgage loans improves the chances of owning a home greatly.
The reason these loans are so affordable is that they are subsidized by the US government, through the Department of Veteran Affairs (VA). The benefit of this is that the loan itself is secured, drastically reducing the risk that the lender faces. This translates to better interest rates than might otherwise be charged, lowing the overall cost.
However, a key difference between mortgage loans that have been secured through the VA and those from normal lenders is that there is no need for a down payment. This factor lifts much of the financial pressure when seeking a home.
History of VA Loans
The reason that VA mortgage loans are available at such discounts comes down to the original purpose of the loans themselves. The VA took it upon themselves to ease the challenge of returning to civilian society for American World War II veterans. The cost of getting a home was one particular hurdle servicemen struggled with.
So, in 1944, it introduced mortgages at much better interest rates than were previously available. This drastically reduced the cost of buying a home, allowing those who had fought in the war to set about building their lives (family and professional) with less of a financial strain to handle.
The move was inspired to an extent by the Federal Housing Administration (FHA) which had been set up by President Roosevelt a decade earlier. At that time, the national home ownership rate was just 40%, but offering subsidized mortgage loans that charged lower interest rates soon saw that figure grow to more than 60%.
Getting the best rates for a VA mortgage loan is dependent on the lender that is approached. This is because the VA does not actually issue the loans or set the rates. It only subsidizes the loan, so the terms can change along with the market itself.
Setting out to find the best rates can be extremely difficult, because the particular workings can be quite complicated. For this reason, it is better to employ a loan officer to find the terms that most suit your situation, and your budget. Their job is to stay abreast of current market developments, so they should be able to find better interest rates.
What is more, these mortgage brokers should be able to find the right lender for your situation too. This is important because, while these mortgage loans may seem much more affordable, charges and fines can push up the overall cost. These charges are all set by independent lenders.
The Best Time is Now
There has never been a better time to get a VA mortgage loan than now. This is because the rates charged by lenders have fallen so much in recent years, due to the slow movement on the realty sector. Lower interest rates mean that the cost has fallen, and this has encouraged consumers to keep buying, though admittedly still at a slower rate than a decade ago.
And since, with the VA, even better interest rates can be secured, the cost is almost rock bottom. While mortgage loans everywhere are generally less costly than they once were, the VA is still the best place to go.