How Do VA Home Loans Work - Benefits and Requirements

A home is a place where we feel security and peace. It is one of the most important basic needs of human beings. Seeing this requirement of its citizens, US government started VA home loan program in 944. According to this program, eligible military persons and veterans can purchase a home of their dreams without any down payment and low-interest rates.

A. The working process of VA

Actually, VA does not give a home loan directly. It provides it through mortgage companies, banks, and other financial organizations. To save these institutions from losses or a borrower's default, federal government backs the lenders. This support and guarantee inspire VA home loan lenders to provide a mortgage to borrowers with more good terms in comparison to old loan schemes. VA also does not fix credit score requirements for candidates. However, lenders can have their own such requirements and make policies for sanctioning a home loan.

VA Home Loan Specialist in Utah

B. Benefits of VA

The exceptional benefits of VA or GI Bill of Rights have changed the lives of several veterans since its beginning. Sadly, many US citizens are unaware of this loan program and are lacking its benefits. Hence, for your convenience, we are giving here some major advantages of VA, so you can utilize its benefits fully:

1. No down payment required

Most of the home mortgages such as FHA and conventional loans require 3 to 5 percent down payment to purchase a home. However, with VA home loans in Utah and other regions of US, you need not making any down payment and can get 100 percent financing.

2. No Closing Costs

Where traditional loan programs require thousands of dollars for closing costs that include homeowners insurance, inspection fees, title insurance, and taxes etc. VA does not require them at all. Here, the closing costs can be covered by a seller instead by a buyer.

3. Home Inspection

The Veterans Administration has set some living standards for the property purchased by a veteran. A property should meet these basic requirements in all conditions. The expert team of VA ensures that the house bought by a buyer is free from all damages. If needed, a house is repaired for buyers without extra costs or expenses.

4. Refinance at lower interest rates

A veteran can refinance a mortgage at lower interest rates with VA. A borrower can do so without the need for good credit scores, appraisal or complex documentation process etc.

5. Safety from prepayment penalty

A prepayment penalty is charged by a lender in case a loan is refinanced or home is sold before a certain period of time. This can be of thousands of dollars. But in the case of VA, there are no such charges even if you pay the entire loan before a specific period of time.

6. Assumeability facility

VA allows veterans to sell their house to an eligible person who can take over the responsibility of your loan. However, in traditional loans, there is no such assume-ability facility is provided.

7. Low interest rates

The conventional home loans can have 3 to 12 percent interest rates charges. But, in the case of VA, the Department of Veterans Affairs has set extremely lower interest rates. These VA home loan rates and annual payments do not change on a fixed loan program.

8. Low origination fees

Most lenders charge borrowers some fees to originate a mortgage. But, with VA loan, this amount is determined by the VA department. No financial organizations or mortgage lenders in Utah and other areas of the US can charge from buyers more than this fixed amount.

C. Basic requirements for VA mortgage

To get a VA mortgage, a borrower should meet some specific service requirements established by VA. To be eligible for this loan program, you should have served:

• Ninety days of active service in war times. Or
• One hundred eighty-one days of service at the time of peace. Or
• Over six years in the National Guard or Reserves.

In addition to these, the surviving spouse of a veteran who died on duty or due to service-associated disability can also apply and take advantage of this loan program.

Conclusion

Each home loan program and its process is different from others. For military persons and veterans, VA with its above-mentioned advantages can be one of the best options to buy a home. To know more about VA and whether you fit for this loan, talk with some VA home loan specialist in Utah and other parts of US. They have long years of experience and knowledge in this field and can get you the best deal as per your specific requirements and goals.