Veteran loans are not a new concept. It has been around since 1944, and service member has a lot to thank it for. While most people may only have knowledge of only the surface terms of the loan, there is a lot about it that people need to familiarize themselves with. One of the benefits is that $0 of a down payment for a mortgage is required: this is only one of the many benefits of the loan.
Here are some of the things you probably didn’t know about veteran loans.
- They are not for all types of homes
Mobile homes, condominiums, new construction, and modular homes are eligible for VA Home Loan Benefit. If you are looking to get an operational farm, you are not lucky. In such a case, you might want to get financing through other types of loans.
- VA benefit entitlement can be restored
Eligible service members to VA requirements have given entitlements to this loan. Most people have no clue whether they can continue borrowing even after their entitlement has deleted. The answer to this question is yes. However, note that your entitlement can only be restored after you have paid the loan in full. In other words, this is a lifetime benefit.
- The government insures the loan
As the term suggests, VA loans are given by private lenders, but then they are guaranteed by the government. This assures the lender that they do not risk losing the money even if the borrower fails to pay, for one reason or the other. The advantage of government-insured loans is that they are quickly approved. This makes it easily accessible.
Government-insured loans are also lenient when it comes to credit scores.
- VA loans are for primary residents
If you are looking to buy a commercial residence or a vacation home, pursuing a VA loan will not be fruitful. There are strict terms regarding the kind of property this loan should help you acquire. It is for a home where you will be spending most of your time. However, if you are lucky to find a multi-unit home, you can rent out some of the space. However, you should be staying in that same residence.
- Veteran Affairs (VA) does not issue the loan
Since it is called a VA loan, it is easy for one to get it wrong and think VA issues the loan. That is not the case. All the agency does is provide the guaranty and vouch for the eligibility of service members. The loan is issued by private lenders and backed by the government.
Having a VA loan benefit is a big win. Unlike in the cases of conventional loans, something like declaring bankruptcy will not block you from getting the loan. Also, note that as much as you are not required to make a down payment on the mortgage, you will be charged a VA funding fee, which is used to keep the program functional.