3/27/2017

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VA Loans

Veteran's Administration (VA) loans were established by Congress in 1944 as a special program to reward veterans for the service they provide to the country, especially during times of war.

VA loans offer "0" down payment, reduced closing costs, and interest rates that are usually comparable to, or lower than, conventional rates. This gives veterans, who are elegible, a better chance of buying a home than non veterans.

Veterans, active duty or reserve troops, and certain surviving spouses of veterans may be eligible for VA loan financing. All honorably discharged veterans who served during times of war such as World War II, the Korean War, the Vietnam War and for certain dates during the Iraq Wars, are eligible.

A veteran serving during peace time from July 1947 to September 1980 would have to have completed 24 months of continous active service. If the veteran was discharged for a service related injury or disability after serving at least 181 days of active military service, the veteran is elegible for a VA loan.

The Veteran's Administration does not make the loan to the veteran. The veteran has to submit an application through a qualified lender, a bank, mortgage company, or savings and loan and qualify for the loan based on employment history, credit history, and veteran's eligibility status.

Just because you are a veteran does not mean that you will automatically be approved for a VA loan. The lender decides if the veteran qualifies for the loan, not the Veteran's Administration. The Veteran's Administration simply guarantees the repayment of the loan if the veteran loses property through foreclosure proceedings.

Good credit is still an important factor in getting approved for a VA loan but the credit rules are a little less stringent that those of conventional lenders but the lender will do a thorough job of processing and underwriting a veteran's loan application to make sure that the veteran can make the monthly payments.

Some closing costs, processing fees, administrative fees, and underwriting fees are not allowed to be paid by the veteran and those costs can add up to be a significant amount. A veteran is allowed to pay for the appraisal of the property, credit reporting fees, origination fees, title charges, and recording fees.

There is also a VA loan called a "VA NO-NO" in which a veteran qualifies for the loan with no down payment and no closing costs whatsoever. In this type of VA loan, the seller agrees to pay all of the veteran's closing costs.

VA loans are great for veterans who want to purchase property, especially if the veteran is a first time buyer.

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