VA Loan Primer

More than 18 million members of our country’s proud military have become home owners with the help of home loans from the Department of Veterans Affairs.  Congress passed the VA loan guarantee program in 1944 to help returning GIs achieve their American dream.  Many Summit NJ listings are purchased with VA loans.What it is?A VA loan is a powerful and flexible tool in the world of lending.  The VA doesn’t actually issue a loan.  Instead it guarantees the loan made to a member of the military.  The VA will repay up to about a quarter of the value of the loan in the event that the buyer defaults.   This gives a VA-approved lender protection and makes the borrower a safer bet.  A lender with a guarantee may be able to garner better terms and more competitive rates which can make owning Summit NJ real estate a more attainable goal.What are the benefits?VA loans carry some serious benefits.  Borrowers can secure a loan with no money down and no private mortgage insurance.  This fact alone brings many military families to their Summit NJ real estate agent.  Less stringent underwriting standards like higher allowable debt to income ratios also make buying property more affordable.  Competitive rates and no prepayment penalties can help a buyer pay off their home sooner.Who qualifies?Many veterans and active duty personnel qualify for VA loans.  An active duty service period of 181 days or 3 months during war time will qualify a service person for a VA loan.  National Guard members and reservists with 6 or more years also qualify.  Spouses of those who have paid the ultimate price for our freedom qualify for VA loans.  Those who qualify should request a Certificate of Eligibility online.  A VA-approved lender can help the borrower obtain the proper forms and certificates.What can be purchased?A VA loan is typically used to build or buy a primary residence.  It can also be used for refinancing your home.  An experienced Summit NJ realtor can help you decipher any other options available like rural properties, condo and “fixers”.  Investment properties are not eligible for VA loans.  Contrary to popular belief, there is no actual cap on VA loans.  The maximum amount will vary depending on a number of factors.  You should talk to your lender in depth about the amount you will be able to borrow.Our country’s military members deserve the best terms and conditions for buying a home and a VA loan ensures they get them.