Mortgage loan is not an unfamiliar phrase for the net crews who are interested in researching on finance. This loan makes good use of available home equities and converts these into cash. You can use the entire amount of home equity or a part of it to obtain mortgage loans. Usually, any retired homeowner can qualify for this loan if he/she does not have a larger amount of outstanding lien on the property. However, VA mortgage loan is different and reserved only for veteran military personnel or their widowed spouses.
VA is a trimmed form of Veterans Administration. VA mortgage loan is guaranteed by the Department of Veteran Affairs. Qualifying for VA loan is easier as any veteran military person (though some limitations apply) can apply for this loan. This loan can be availed by anybody who has served military department. So a person from the National Guard or reserves or any of the four branches of military is considered eligible. As stated above, spouses of the veterans are also eligible for loans as long as they are not remarried.
What are the benefits of VA mortgage loan?
A veteran military professional needs no down payment to avail this loan. VA loan has no mortgage assurance on it. It is in stark contrast of familiar mortgage loan where 80% loan-to-value ratio is more common. Among other advantages, favorable interest rate is more important.
How does this loan work?
If you want to get VA loan, you have to approach VA department and collect a certificate of eligibility. If you are to purchase or refinance a home, you need to pay a funding fee. Funding fee ranges from 50% to 3.3% and can be included into the loan. In some exceptional cases where a person is considered disabled by the concerned authority in VA department, the entire funding fee is waived.
Is there any restriction on applying for the loans?
All veterans are not considered eligible for VA loan. There are certain factors like dishonorable discharge, property foreclosure during the loan tenure etc that can make you disqualified for VA mortgage loan. Only one VA loan can be used at a time. If you have a VA mortgage loan on your home, there are two options to apply for further loan – either sell your house or refinance it into FHA or other similar loan products. The basic point is to break free from eligibility requirements for VA mortgage loan.
The banks are in no-risk zone while providing VHA loans to the veterans. Federal Government guarantees the loan. If a borrower defaults on payment, the bank will be compensated by the government. The banks are more willing to extend their help as government intervention mitigates their loss if the loan falls into arrears.