Veterans of the United States Army and its many different corps are familiar with the Department of Veterans Affairs, but what they might not be aware of is that the VA offers all veterans a loan especially for them: the VA loan. VA loans are quite different than traditional loans that home buyers may already be familiar with, so it’s important for veterans who want to utilize the government assistance they receive to its fullest to know what they’re entitled to. Here is what veteran home buyers need to know about using VA loans.
Different Loans For Different People
One misconception a lot of people share about VA loans is that there is that there is just one VA loan that everyone uses. However, this is not true. There’s actually multiple different types of VA loans all aimed at different demographics and different needs. Here are some of them and what they are for:
- Purchase loans: The most common type of VA loan, these help buyers purchase a home without requiring a down payment or any sort of private mortgage insurance that would be required by other loans.
- Native American Direct Loan (NADL): These loans are intended for Native American veterans who want to purchase or build a home on Native American Trust land. Applicants must have a valid Certificate of Eligibility (COE) to gain approval.
- Adapted Housing Grant: These grants help veterans build a new home or refurbish an existing one to make it accessible for themselves so they can live safely in the home.
- Interest Rate Reduction Refinance Loan (IRRRL): If a veteran currently has a loan that is not sponsored by the VA, they can use this to refinance that existing loan into a VA loan.
These are just four of the different loans that the VA offers to its veterans. For more information on these and other loans, be sure to visit the official VA website or speak with someone who works for the Department of Veterans Affairs who is knowledgeable on the subject.
VA Loan Eligibility
As with any loan, the eligibility is extremely important. However, with VA loans there is no one set of criteria that an applicant must meet, and this is because there are so many different types of VA loans. Each loan has its own criteria that applicants must meet in order to gain approval. For instance, someone applying for an NADL must be of native American descent, and someone who wants to use an IRRRL must already have some other type of loan that isn’t sponsored by the VA such as a 30-year fixed rate mortgage. Applicants must be aware of the criteria for their chosen loan before applying to ensure that they don’t get rejected outright - and be prepared for a lot of paperwork.
Advantages of Using a VA Loan
VA loans have many different advantages that make them appealing to buyers. One of the most notable is that many VA loans don’t require the buyer to have a down payment and even pay reduced closing costs. VA loans also typically offer reduced mortgage rates compared to other loans and don’t have any prepayment penalties like some other loans. However, it is important to note that while buyers get lenience with a lot of fees, they do have to pay a VA Funding Fee. The amount of the fee varies depending on the loan used, but it’s typically less than 3% of the home’s cost, and the money is used to keep the VA up and running in the future.
VA loans can be an excellent choice for many veteran Leavenworth home buyers looking for their next home, but it’s important to be completely informed. Before committing to a loan, be sure to consult an expert to ensure that it’s the right choice.