In 1944 , VA loans were crafted by the Department of Veteran Affairs to help those who proudly served our country and provide many benefits other home purchasing loans simply do not offer. Among the many benefits, perhaps the most powerful tool given to our service members (or in some cases, surviving spouses) is a VA loan. Over 70 years later, many vets, service members and surviving spouses are using VA loans to purchase a home.

Tried and true for over 70 years, VA loans have been used to get service members and their families into homes and have been adjusted to reflect the ever-changing real estate market.

One of the obvious benefits of a VA loan is that there is no downpayment required for service-members, vets, or surviving spouses who qualify. Almost all other housing loans require money-down for a loan. A house is an expensive risk for a loaning institution, and most of the time they require a downpayment to agree to finance a borrower. With a VA loan, there is no money required to originate the loan. That way VA-qualified buyers can save their money for home renovations.

Since the U.S. Department of Veteran Affairs issues VA loans, they are federally backed. This guarantee means that the lender is protected against a loss; most loans require PMI (primary mortgage insurance) to protect the lender if the borrower defaults. This allows the buyer to abstain from purchasing primary mortgage insurance (PMI) throughout the course of their loan. No PMI means lower overall loan payments and creates more buying power for the buyer.

Borrowers can add more money to their loan in order to add energy efficiency to their new home, up to $6,000. If a borrower is purchasing an older home and wants to make it more efficient, they should ask their loan officer what steps need to be taken to allow for this. Your UAM loan officer would, of course, be glad to help.

VA loans require VA appraisals. While most loans will require an appraisal, VA appraisal requirements are normally more stringent in protecting the buyer. Each appraiser is professionally trained and sticks to a strict set of guidelines intended to protect both the lender and the buyer. VA appraisers are also very rigorous at ensuring that the necessary repairs are made in reference to the buyer’s safety; this is especially helpful for first time homebuyers.

VA loan rates are extremely competitive, even for buyers with lower credit scores and higher debt-to-income ratios. How low? Buyers can obtain a VA loan with a minimum of credit score of 580 if they pass the other guidelines outlined by the U.S. Department of Veteran Affairs.

There are no prepayment penalties associated with VA loans meaning borrowers aren’t penalized for paying their loan off early. Some housing loans can penalize borrowers for being over-responsible and paying their loan off in a quick amount of time. Whereas other loans might have a fee for paying off the loan early, VA loans will never charge you for paying off your loan early.

Getting a VA loan is not just a one-time ordeal. VA loans can be used as many times as service members and veterans would like as long as they do not default on the loan and their loan amount is paid in full. There is no limit to the amount of sequential VA loans one can obtain in their lifetime. Sometimes borrowers can obtain two VA loans depending on how much “entitlement” they have accrued during their service. Ask your loan officer for more details.

VA loans tend to be more forgiving and understanding if a borrower falls on hard times. Sometimes life happens and people get down on their luck. The Department of Veteran Affairs provides access to professional advice for former service members. Oftentimes they are able to negotiate a new payment plan, advise borrowers through the sale of their home or sometimes assume the loan in what is called a deed in lieu of foreclosure. In these extreme circumstances, although not ideal, it prevents the borrower from going into foreclosure.

For more information on what is needed to qualify for a VA loan contact UAM for a VA loan specialist.

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