There is nothing more rewarding in the life of a military and war veteran than assuring the future of his family. More than the awards and recognitions given to him, a veteran will surely want to see his family dwelling comfortably in a house they call their own. With the help of a veteran home loan, this dream is fulfilled.
Enacted into law as the Servicemen's Readjustment Act of 1944, the VA Home Loan as it is commonly referred, made it easier for military men to have their own house. This is afforded through the implementation of a no down payment scheme. This is the summarizing benefit of this type of home loan which is exclusively designed for the veterans and their families.
With a no down payment scheme springs other advantages. This means that mo amount can be allocated for emergency funds. And from the emergency funds, other home-related processes can be funded such as repairs and renovations – which in reality would be difficult to accomplish if the home to purchase requires the traditional 20% down payment.
Even if you are to compare the VA financing to other types of loans such as the FHA and the conventional loans, the 3.5% and the 10% down payment would still be harsh on maintaining an emergency fund for immediate needs.
The availability of a no down payment can instantly send great music to the ears of everyone who is dreaming of owning a house. However, this type of home loan isn't for everyone. The basic guideline that rules it is that only eligible veterans, those in active duty, members of the National Guards, reservists, and surviving spouses of the military personnel or veteran can avail of such loan. The Veterans Administration (VA) enforces strict measures to ensure that only the qualified person can avail the financing. A certificate of eligibility must be obtained from the VA to ensure that the borrower is qualified. Sounds time-consuming! Not really – because the lender can help the borrower to obtain this certification.
Another thing you must know is it isn't applicable for other types of homes other than those which the borrowers will occupy. This means that investment homes or vacation properties are definitely out of the list and will surely be a reason for non-approval of the VA financing.
There must be a funding fee which the borrower will shoulder. Percentage varies depending on the borrower's classification. For borrower's worrying of not sufficient amount for the funding fee, there are sellers who are willing to shoulder such and roll them into the loan. However, the borrower must be prepared to repay the funding fee including its interest rate along with the dues on the VA home loan itself.