Advantages and Disadvantages of VA Loans

Advances or Benefits of a VA Loan

There are several advantages to a Veterans Administration home loan. The most obvious and common benefits of a Veterans Administration home loan are as follows:
1.    No down payment is required and 100% financing of the home loan is possible. While in the case of normal fixed-rate mortgages not making at least 20% of the purchase price as down payment result in a compulsory payment of homeowners insurance and property taxes to the lender, VA Loans can be acquired at zero down payment without the addition of any such clauses.
2.    There is no compulsory payment of private homeowners mortgage insurance.
3.    There are also no penalties associated if you prepay the loan. It is usually the case with normal mortgage is that a lender requires you to pay an additional payment to him equal to the interest of six months or more if the borrower pays off the mortgage earlier than the set tenure. Typically, this penalty is charged if the borrower pays off the mortgage within one to 5 years which usually happens when the borrower decides to refinance the mortgage to a lower rate. However, the borrower may still have to pay a prepayment penalty in the later years of a mortgage.
4.    The interest rates offered on a VA loan is usually lower than the interest rate on a regular mortgage.
5.    Easier loan qualification process than a conventional home loan.
6.    Sellers are often required to pay all or part of the closing costs.

Disadvantages Of a VA Home Loan

VA home loans also have their disadvantages. They are as follows:
1.    VA Loans made prior to 1 March 1988 can be resumed with no qualifying of the new buyer. If you wire of such a protein the force the veteran homeowner may be liable for the loan.
2.    Veterans Administration had a reputation of delaying and taking longer than the conventional mortgage process to approve the loan. This resulted in hesitancy part of many sellers to work with a borrower who is applying for a VA home loan. However, this scenario has changed in recent times and the working of the Veterans Administration for the purpose of approving home loans has improved although it may still take longer than a conventional mortgage approval.
3.    Sellers are also hesitant to work with people applying for VA loan as they are often asked to pay a portion or all of the closing costs.

The website of the Veterans Administration is a good resource for checking detailed information about Veterans Administration homeowners loans. In case you cannot find adequate information or have difficulty resolving your issue you can always contact your local or regional Veterans Administration’s office.

Features of a VA Home Loan

What kind of property or home can be purchased with a VA Loans?

Almost all kinds of houses and properties can be purchased under a VA Loans as long as they fulfil the following conditions.
The property purchased must pay a personal residence and should be within United States and its territories.

  1. You can use a VA Loans to purchase an existing single family home.
  2. Townhouse or a condo in a VA approved project. New construction residence.
  3. A manufactured home.
  4. Refinancing or home mortgage.
  5. Conditional home improvements.

The amount of money that you can borrow under a VA home loan

There is no fixed limit set on the amount of money that can be borrowed under Veterans Administration home loan. It is usually limited to the amount of money that a lender is willing to lend which for the difference on the amount that can be sold by the lender on the secondary market.

The funding fee associated with a VA Loans

A fee of 2% of the amount of the long which increases to 2.75% for is always reservists is payable to the Veterans Administration when they close your loan. This cost can really included in the initial known as were. Also if the borrower agrees to pay your down payment of at least 5% on the home loan this particular fee can be further reduced.

Is it possible to get a second VA Loan?

It is possible to get a second VA Loan if the previous loan was made under previous entitlement guidelines. You may be eligible for an additional loan based on the present increased value even of the previous loan has not been paid in full. It is also possible that your entire entitlement to the Veterans Administration is home loan in restored to purchase a home under these circumstances.
You’re also entitled to a second VA Loans if your property is being sold and the loan has been paid in full or if you have repaid the prior loan in full and still own the property.
You can also get a second VA Loans if a qualified veteran assumes your existing loan and agrees to substitute his or her entitlement for yours.

Information about the Veterans Administration Home Loans

What are VA Loans and who can qualify for them?

VA Loans or Veterans Administration home loans are special type of loans that are made available to veterans of the US armed services. The specialty about these kind of loans is that a portion of the loan amount is guaranteed and covered by the Veterans Administration and protects the lender to a certain degree in case the borrower happens to default.

VA Loans or veterans administration Home Loans terminology:

•    The guaranteed amount of a VA loan is called an entitlement.
•    The current maximum entitlement for loans up to $144,000 is $36,000, with the exact figure determined by your loan amount.
•    The maximum entitlement for VA home loans over $144,000 is $60,000.
An entitlement is not a cash payment to you or to the bank. It is the amount the VA promises will be paid to the lender if you default on your loan. Should that happen, the VA may pursue you to recover those funds.

Who Is Eligible for a VA Loan?

Wartime/Conflict Veterans who were not dishonorably discharged, and served at least 90 days:
World War II

•    September 16, 1940 to July 25, 1947
Korean Conflict

•    June 27, 1950 to January 31, 1955
Vietnam Era

•    August 5, 1964 to May 7, 1975
Persian Gulf War

•    Check with VA regional office for specific eligibility.
Afghanistan and Iraq

•    Check the VA’s Web site for eligibility guidelines for current service in Afghanistan and Iraq.
Peacetime Service
Peacetime service of at least 181 days of continuous active duty with no dishonorable discharge. If you were discharged earlier due to a service-connected disability, you should speak with the regional VA office to verify eligibility.
•    July 26, 1947 to June 26,1950
•    February 1, 1955 to August 4, 1964, or
•    May 8, 1975 to September 7, 1980 (enlisted) or to October 16, 1981 (officer)
•    Enlisted veterans whose service began after September 7, 1980, or officers whose service began after October 16, 1981, must normally have served at least two years.
Reserves and National Guard
Members who have completed six years of service and have been honorably discharged (or are still serving) may be eligible for a VA loan. Contact your regional VA office for more details.
Other Qualifying Service
Other types of service that may make you eligible for a VA loan:
•    Certain US citizens who served in the armed forces of a government allied with the United States during World War II.
•    Surviving spouses of eligible persons who died as the result of service or service-connected injuries. The surviving spouse must not have remarried.
•    The spouse of any member of the Armed Forces serving on active duty who has been listed as a prisoner of war or missing in action for more than 90 days.
Anyone with questions about eligibility should speak with their regional VA office.

What is a Certificate of Eligibility?

It is a document issued by the VA that lets lenders know you are eligible to apply for a VA loan. The certificate does not guarantee the bank will approve your credit application.