A VA home loan is a program offered by the Federal Department of Veterans Affairs for those who have served in the military or are currently serving. Although they do not provide the money for these loans, they guarantee the loans made by private lenders. This guarantee makes it possible for veterans to purchase a home without a down payment and to negotiate mortgages at lower rates. It can also be used to refinance a property that was purchased under the VA program. Home loans for veterans under the VA program can also be used to purchase specially adapted properties for veterans that have service-related disabilities. The program can also help Native American veterans to purchase property on tribal-held land.
If the service person is currently serving in the military, the applicant should go to his or her commander, personnel office or adjutant to secure a Statement of Service that shows the name of the applicant, the social security number, date of birth, entry date on active duty, duration of any lost time and the name of the commander. Eligibility is based on the length of service for both active duty members and reservists. Veterans no longer in the service should have their Service Record. Approval is dependent on Honorable Discharge of military service. Once the information is verified, the Department of Veterans Affairs will issue the Certificate.
The applicant can then begin to look at suitable properties to purchase. Although the VA does not set limits on the amount you can borrow for a primary residence, the program cannot assume liability for mortgage amounts above the service member’s entitlement. Basic entitlement is set at $36,000, but that is not the maximum. The upper limit of this loan is determined by the location of the property you intend to purchase, and can be for several hundred thousand dollars. A loan specialist can help you determine how much you can qualify for.
A VA loan specialist can help you in many ways. He or she is a mortgage broker who can find better interest rates, get you qualified even with somewhat sketchy credit, and make the entire process much smoother.
Once you have found a suitable home, you will apply to a private lender that accepts VA loan guarantees. The service member must supply the Certificate of Eligibility when applying for the loan. The lender may also require a Statement of Service, which serves as verification of employment in the military. Military veterans may be asked for records of retirement benefits or other sources of income.
Although your Certificate of Eligibility can help you to secure a mortgage, the lender is free to deny the loan if your credit records shows payment problems. The veteran should always ensure that past debts are paid on time and in full to ensure a good credit rating. Any problems should be negotiated with the debtor in advance of attempting to secure a loan. Your VA loan specialist can help you with that.
The lender will then notify you of the approval of your loan with information about the mortgage rate. You will then be required to be at the closing of the loan to sign papers before you can take possession of the property.