Here are some of the basics on VA loans.
Part 1 of this series just kind of explains what a VA loan is.
- A mortgage loan guaranteed by the U.S. Department of Veterans Affairs (VA).
- The VA loan was designed to offer long-term financing to eligible American veterans or their surviving spouses
- The original Servicemen's Readjustment Act, passed by the United States Congress in 1944
- Basically… its like mortgage insurance for lending institutions for Veterans who qualify
- The VA Guarantee is 25% of loan amount (up to entitlement max)
- Meaning Lending institutions will get back up to 25% of your loan amount in the event of a foreclosure (which typically will cover all their losses)
- Protects lender from loss up to the amount of the guaranty
- Increase buying power for Veterans
- 100% loan-to-value ratio = $0 down loan
- No mortgage insurance requirements = lower monthly payments
- Lower interest rates since the loan is backed by the Federal government
- Fast and easy UW approvals
- Flexible guidelines
- Higher DTI approved
- No minimum credit score
- 90% loan-to-value ratio on cashout refi
- Assumable by a qualified borrower
Next... Part 2: Common Minsconceptions on VA loans
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