In today’s volatile market, getting the financing you need to purchase a home is often a confusing and time-consuming process, however, it’s crucial that prospective buyers do their homework before picking the loan that’s right for them. VA loans, which are often overlooked, are a great option for past and current military personnel looking for financing in today’s more stringent mortgage environment.
Established in 1944 as part of the Servicemen’s Readjustment Act, VA loans are available for any individual who has served in active duty in any branch of the U.S. military for a minimum of 90 days.
The great thing about this loan is that it allows financing without requiring a down payment! It also doesn't allow the lender to charge the veteran "PMI" which is Private Mortgage Insurance.
A VA loan, though, does require the borrower to pay a one-time funding fee on their purchase, however, which can be paid up front or financed into the total cost of the loan. The funding fee for regular military members is 2.15 percent of the loan while Reservists pay a fee of 2.40 percent.
In addition to servicemen and servicewoman, non-active duty personnel, such as individuals in the Army Reserves or National Guard, may apply for a VA-backed mortgage provided they have completed six years of service. The spouses of deceased or missing military members are also eligible if they have not remarried.
Statistics provided by the Department of Veteran’s Affairs show that there are approximately 25 million homeowners currently eligible for a VA loan. However, only 10-15 percent of those who are eligible have taken advantage of the VA loan program when buying or refinancing. That's why it is so important to have a knowledgeable Real Estate Agent as well as a knowledgeable Mortgage Lender!
One reason for the low numbers is that for many years leading up to the mortgage crisis, there were numerous conventional mortgage products that were easier or more economical to the veteran than the VA loan.
During the years of early 2000 until about 2008, 100% conventional financing was commonplace, so the veterans felt like "why pay the VA funding fee just to have 100% financing". Of course, those conventional 100% financing days are, for the most part, non-existent now! Plus, VA appraisers have more stringent "requirments" and paperwork to follow when finalizing a VA loan.
Many veterans, especially those not so recently discharged, don’t fully understand the benefits of a VA loan, and many aren’t even aware that they’re entitled to one. With a VA loan, veterans can literally buy a home with little to no money out of pocket.
Those interested in learning more about VA loans, please contact me, Karen Borden, your North Alabama Real Estate Agent and I can put you in contact with a KNOWLEDGEABLE Mortgage Lender! Now is the time, with 3.75% interest rates, to buy that home! If you are looking to purchase Real Estate in Huntsville, AL; Madison, AL; Madison County, AL; Limestone County, AL; Athens, AL; Morgan County, AL - or any of those surrounding areas, please call! North Alabama is a HUGE military relocation area, so I know there are potential buyers out there that can use our help!
Borrowers who received a dishonorable discharge from any military branch are not eligible.
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