This is still a buyers' market and the VA loan is the best financing if you are a veteran. I have found homes for many military families who have used their VA benefits to purchase their home. In fact that is how we purchased our first home many years ago.
The ease of a VA Home Loan is one of the first reasons an eligible borrower might choose this program. How much effort is needed to get a VA home loan? A few simple documents are all it takes to determine pre-approval. The most important one is your DD214.
If you obtain a VA Loan, your loan is guaranteed or insured under the Home Loan Guaranty Program, which is administered under the Veterans Benefits Administration (VBA). Lenders must obtain special licensing and follow specific guidelines and auditing requirements in order to do VA Mortgages.
The VA Loan allows Veterans 100% financing without private mortgage insurance or a needing to obtain a 20% second mortgage. The guarantee of a VA Guaranteed Home Loan means the lender is protected against loss if you fail to repay the loan. Because the guaranty replaces the protection that the lender normally receives by requiring a down payment or mortgage insurance, qualified borrowers are allowed to obtain favorable financing terms without a down payment.
A VA loan can be assumable. For VA Loans committed on or after March 1, 1988, you may sell your home to someone who agrees to assume your loan if the creditworthiness of the new borrower is approved. This can be a significant selling point when it comes time to sell your home.
VA loans rates offered to VA borrowers can often be lower than interest rates offered to the same borrowers for conventional loans.
A prepayment penalty is a provision of your contract with the lender that states that in the event you pay off the loan entirely before the term has run out (as in the case of a refinance), you will pay a penalty. In the case of a VA Loan, if you pay off your loan early, your lender cannot require that you pay a prepayment penalty. A prepayment penalty can be an inhibiting factor in the early sale or refinance of a home. This policy has given many borrowers peace of mind for the future of their loans.
One of the requirements for the servicing company of a VA Home Loan is that there be no late charge unless payment is more than 15 days overdue. Any late charge may not exceed 4 percent of payment amount. In addition, financial counseling is available from the VA in case of temporary financial difficulties.
The VA Streamline Refinance allows qualified VA mortgage holders to refinance at a lower interest rate and/or term without having to re-qualify and obtain another appraisal. It provides an important ongoing benefit to borrowers who decided on a VA loan.