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Real Estate Article Series
VA Home Loans: The Facts
American veterans currently serve and have
served their country for modest pay and limited financial security.
In some cases, a prolonged period outside of the private workforce,
or injuries incurred while serving in the U.S. armed forces
have resulted in diminished employment and earning potential,
leaving some veterans unable to afford a home under regular
mortgage and home loan circumstances. That is part of the reason
why the United States Department of Veterans Affairs
provides guaranteed home loans to help American veterans pay for a home
of their own.
VA home loans encompass several advantages over traditional
loans, and are available to retired and active duty service
personnel, some members of the Selected Reserve, and spouses
who fall into certain categories such as the un-remarried wives
and husbands of Armed Service personnel who perished from service-related
injuries or conditions, or who have been missing in action
or a prisoner of war for more than 90 days. The following
guidelines may help you determine whether your service makes you eligible
for a VA guaranteed loan:
Active
duty – eligibility begins after 90 days of continuous
active service, or after 181 days of continuous active non-wartime
service.
Selected
Reserve – reservists or National Guard personnel
with a minimum of six years service, or those who have been
honourably discharged due to disability, and who have been
retired, who now serve on a different Ready Reserve, or who
remain in the Selected Reserve are all eligible to apply for
a VA loan.
Certain service does not meet the requirement for VA financing,
including World War I service and active duty for training
in the Reserves or National Guard. Individuals who do not qualify
for a VA loan may, however, find themselves eligible for a
Housing and Urban Development /Federal Housing Administration
veterans’ loan. Contact your regional VA office for more details.
Eligibility
for a VA loan is made by Veterans Affairs. Qualified
individuals will receive a certificate which they can use when
applying for a VA loan. Certificates can be obtained from any
VA Eligibility Center upon submission of VA Form 26-1880 and
suitable proof of service and discharge conditions. A copy,
or Certificate in Lieu of Lost or Destroyed Discharge papers
is available to veterans who can prove their military service
but who may no longer have their original discharge documentation.
This certificate can be helpful in obtaining a VA loan.
Each Veterans Affairs home loan supplies an amount of money
that it guarantees lenders against loss on loans made to veterans.
The maximum entitlement amount is currently $36,000
(or up to $60,000 for certain larger loans), but that figure is always
subject to legislative changes. Contact your local VA office
regarding loan figures and eligibility before agreeing to a
particular loan. This entitlement amount is a one-time allotment
unless a prior VA loan has been paid in full and the property
it was used to obtain has been sold. The entitlement may also
be restored if a qualified buyer agrees to assume the outstanding
loan balance and substitute his or her own entitlement (same
amount used on the original loan). If only part of the entitlement
has been used to secure a loan, the remaining balance may be
used for a second loan. This ‘remaining entitlement’ option
may be particularly useful for veterans who secured a loan
using their entitlement when the maximum amount was lower than
its present value: in this case, a veteran may use the difference
between what he or she was eligible for then and the new maximum
to help secure another loan.
When trying to determine which property to buy or fix, veterans
should consider that most lenders require the total of the
guaranteed entitlement and any cash down payment the veteran
is able to make to equal about one quarter of the total sale
price of the property in question. This limitation may help
veterans decide what they can afford to spend to buy a home,
mobile home, townhouse, or VA-approved condominium, to build
or repair a home, to refinance an existing home loan, or to
purchase a domestic lot for a home.
Finally, VA guaranteed home loans are not administered by
Veterans Affairs. Rather, veterans obtain the loans by applying
to regularly lending facilities and supplying the necessary
proof that they qualify for a VA guarantee.
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SolveYourProblem.com : 2007
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