4/24/2017

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VA Home Loans
by John M. Roberts

  • Attention Veterans: The GI Bill is there for you! By serving in the United States armed forces, you have earned the rights to this very important benefit.

Veterans are a special breed of people, serving their country during times of war and peace, making sacrifices that most people find unimaginable, and they do it with pride and purpose. They serve our country gallantly and without hesitation, putting themselves in harms way, and for this, we owe them a huge debt of gratitude.

One of the biggest benefits given to veterans is the opportunity to purchase a home with "0" down payment under the GI bill, and added to that, many sellers are offering more incentives by helping to pay most, or all, of the the veteran's escrow fees and other closing costs.

Since properties are not selling as fast as they were a couple of years ago, and with many conventional lenders caught up in the mortgage crisis that is hurting the housing market, the Veterans Administration has raised it's guaranteed loan limits to $417,000, and more in areas where home prices are higher.

Once again, VA loans have become a very attractive alternative to other types of loans. Today, veterans can get a loan for the maximum amount the Veteran's Administration will allow, if they can qualify with their income and credit rating.

A veteran who meets eligibility qualifications can purchase a home with no down payment, reduced closing costs, and interest rates that are usually comparable to, or lower than, conventional rates. There is no prepayment penalty, no mortgage insurance, and qualification standards, credit and income, are less stringent than with other options. As a veteran, this substantially increases your chances of owning a home.

You are eligible for VA loan benefits if you served on active duty in the Army, Navy, Air Force, Marine Corps, or Coast Guard for:

  • 24 continuous months or more, or the full term ordered to serve.
  • At least 181 days of continuous service during peacetime.
  • Not less 90 days during wartime.

VA real estate loan benefits also apply if a veteran:

  • was discharged under conditions other than dishonorable.
  • was discharged for a service-connected disability.
  • was discharged for the convenience of the government after completing at least 20 months of a 2-year enlistment.
  • was discharged because of a hardship.
  • was determined to have a service-connected compensable disability.
  • was discharged or released from active duty for a medical condition which pre-existed service and has not been determined to be service-connected.
  • received an involuntary discharge or release from active duty for the convenience of the Government as a result of a reduction in force.
  • was discharged or released from active duty for a physical or mental condition not characterized as a disability and not the result of misconduct but which did interfere with your performance of duty.
  • are an unremarried spouse of a veteran who died while in service or from a service connected disability.
  • are a spouse of a serviceperson missing in action or a prisoner of war.

As of January 1, 2006, the guaranteed maximum VA loan amount, with no down payment, increased to $417,000. This amount can increase to at least $625,500 in certain high cost areas.

VA also allows the seller to pay all of the veteran's closing cost as long as the cost do not exceed 4% of the sales price of the home.

Other changes to the VA Home Loan Guaranty Program includes:

  • Expands the eligibility for Specially Adapted Housing Grants.
  • Re-instates the Adjustable Rate Mortgage (ARM) Program.
  • Expands the eligibility for waiving the VA Funding Fees.

Wartime and Peacetime, as used in the General Rule for Eligibility, refer to the following periods of time:

Wartime Peacetime
World War II
9/16/40 - 7/25/47
Post-World War II period
7/26/47 - 6/26/50
Korean conflict
6/27/50 - 1/31/55
Post-Korean period
2/1/55 - 8/4/64
Vietnam era
8/5/64* - 5/7/75
Post-Vietnam period
5/8/75 - 8/1/90
Persian Gulf War
8/2/90 - undetermined
 
* The Vietnam era begins 2/28/61 for individuals who served in the Republic of Vietnam

If you are now on active duty, you are eligible after having served on continuous active status for at least 90 days. When an ending date is established for Persian Gulf War service, a minimum of 181 days of continuous active duty will be required for persons who did not have wartime service.

"Selected Reserve" means the Selected Reserve of the Ready Reserve of any of the Reserve components which consists of units and individuals who participate actively in paid training periods and serve on paid active duty for training each year.

A veteran, who is not otherwise eligible, who completes a total of 6 years as a member of the Selected Reserve (need not be ordered to active duty) is eligible if he or she either:

  • received an honorable discharge
  • was placed on the retired list
  • was transferred to the Standby Reserve or an element of the Ready Reserve other than the Selected Reserve after service in the Selected Reserve characterized as honorable
  • continues to serve in the Selected Reserve
The 6 years service need not be continuous, nor in the same Reserve or National Guard unit. However, active duty regular military service cannot be combined with reserve service to reach the 6 year requirement.

There are more than 28 million veterans and service personnel who are eligible to for VA financing. Veterans can use the loan to buy a house, townhouse, condominium, manufactured home, or to have a house built.

 

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