VA Financing - A Good Deal For
Veterans
More than 29 million veterans and
service personnel are eligible for VA financing. Even though many
veterans have already used their loan benefits, it may be possible
for them to buy homes again with VA financing using remaining or
restored loan entitlement.
Before arranging for a new mortgage
to finance a home purchase, veterans should consider some of the
advantages of VA home loans
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Most important
consideration, no down payment is required in most cases.
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Loan maximum may
be up to 100 percent of the VA-established reasonable value of
the property. Due to secondary market requirements, however,
loans generally may not exceed $203,000.
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Attractive Fixed
or Adjustable Rates.
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No monthly
mortgage insurance premium to pay.
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Limitation on
buyer's closing costs.
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An appraisal
that informs the buyer of property value.
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An assumable
mortgage, subject to VA approval of the assumer's credit.
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Right to prepay
loan without penalty.
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VA performs
personal loan servicing and offers financial counseling to help
veterans avoid losing their homes during temporary financial
difficulties.
Who Is Eligible?
Veterans with active duty service,
which was not dishonorable, during World War II and later periods,
are eligible for VA loan benefits. World War II (September 16, 1940
to July 25, 1947), Korean conflict (June 27, 1950 to January 31,
1955), and Vietnam era (August 5, 1964 to May 7, 1975) veterans must
have at least 90 days' service.
Veterans with service only during
peacetime periods and active duty military personnel must have had
more than 180 days' active service. Veterans of enlisted service,
which began after September 7, 1980, or officers with service
beginning after October 16, 1981, must in most cases have served at
least 2 years.
Persian Gulf Conflict
Basically, reservists and National
Guard members, who were activated on or after August 2, 1990, served
at least 90 days and were discharged honorably, are eligible. VA
regional office personnel may assist with eligibility questions.
Members of the Selected Reserve,
including National Guard, who are not otherwise eligible and who
have completed 6 years of service and have been honorably discharged
or have completed 6 years of service and are still serving may be
eligible. The expanded eligibility for Reserves and National Guard
individuals will expire October 28, 1999. Contact the local VA
office to find out what is needed to establish eligibility.
Reservists will pay a slightly higher funding fee than regular
veterans.
Had a VA Loan Before?
Remaining Entitlement
Veterans who had a VA loan before
may still have "remaining entitlement" to use for another VA loan.
The current amount of entitlement available to each eligible veteran
is $36,000. This was much lower in years past and has been increased
over time by changes in the law. For example, a veteran who obtained
a $25,000 loan in 1974 would have used $12,500 guaranty entitlement,
the maximum then available. Even if that loan is not paid off, the
veteran could use the $23,500 difference between the $12,500
entitlement originally used and the current maximum of $36,000 to
buy another home with VA financing. An additional $14,750, up to a
maximum entitlement of $50,750 is available for loans above $144,000
to purchase or construct a home.
Most lenders require that a
combination of the guaranty entitlement and any cash down payment
must equal at least 25 percent of the reasonable value or sales
price of the property, whichever is less. Thus, in the example, the
veteran's $23,500 remaining entitlement would probably meet a
lender's minimum guaranty requirement for a no down payment loan to
buy a property valued at and selling for $94,000. The veteran could
also combine a down payment with the remaining entitlement for a
larger loan amount.
Restoration of Entitlement
Veterans can have previously-used
entitlement "restored" to purchase another home with a VA loan if:
The property purchased with the
prior VA loan has been sold and the loan paid in full, or
A qualified veteran-transferee
(buyer) agrees to assume the VA loan and substitute his or her
entitlement for the same amount of entitlement originally used by
the veteran seller. Remaining entitlement and restoration of
entitlement can be requested through the nearest VA office by
completing VA Form 26-1880.
The entitlement may also be
restored one time only if the veteran has repaid the prior VA loan
in full but has not disposed of the property purchased with the
prior VA loan.
Applying for a VA Loan
The application process for a VA
loan through American United is no different from any other
type of loan. In fact we have two simple options:
Apply using our
On-Line Application.
Contact an American United VA
Specialist at (800) 555-2035 and apply by phone.
Any questions? Call or e-mail us at
VA "Streamline" Refinance
If you are a Veteran and currently
have a VA mortgage, you are eligible for the simplest money saving
refinance program available today - The VA "Streamline" refinance.
This mortgage gives existing VA
borrowers the ability to reduce their interest rate and/or loan term
without having to go through all the demands of a typical refinance.
And since no appraisal is required, the time and cost of a typical
refinance are significantly reduced.
To determine if a VA "Streamline"
refinance would benefit you, contact your American United VA
specialist today at (800) 555-2035.
Any questions? Call or e-mail us
at
info@americanunited.com.
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