How to Find an Affordable Mortgage Rate Using a VA Home Loan: Tips and Benefits

February 23rd, 2012

The Department of Veterans' Affairs (VA) home loan guaranty program offers eligible military veterans competitive mortgage rates and accessible mortgage terms. Here's some information useful for applying for a VA mortgage loan:

  • How the VA Loan Guaranty program works: The VA does not make mortgage loans. VA home loans are provided through VA approved mortgage lenders who are protected against losses up to the amount of your VA loan entitlement. The VA loan guaranty certificate issued to your mortgage lender takes the place of a traditional down payment.
  • You'll need a certificate of eligibility: This is the first step in applying for a VA mortgage loan. You can apply for a certificate of eligibility for a home loan guaranty through most VA approved mortgage lenders. You can also apply directly to the VA Eligibility Center by submitting a completed VA form 26-1880 and proof of your military service.
  • Loan Guaranty entitlement amounts can vary: Your basic entitlement is $36,000; for homes costing more than $144,000, your entitlement may be increased up to 25% of the county loan limit where your home is located. County loan limits are adjusted annually.

Compare Mortgage Loans: Benefits of VA Home Loans

  • No down payment: The VA guaranty issued to your mortgage lender protects the lender against losses if you don't make your mortgage payments. Other types of mortgage loans require down payments as a hedge against such risk.
  • Comparable closing costs: Closing costs can be a significant up-front expense of a mortgage loan. VA loans do not carry excessive costs and they're typically competitive if not favorable to closing costs charged for other mortgage loan options.
  • VA funding fee can be financed or waived for eligible borrowers: The VA funding fee for your mortgage can be financed, or, if you make a down payment of 5% or more, it can be waived. Veterans receiving assistance from the VA are also entitled to a waiver of the VA funding fee.
  • VA mortgage loans are fully assumable: When you sell your home, qualified buyers can assume your VA home loan. Most conventional mortgage loans are not assumable.

Comparing mortgage loan quotes using free mortgage calculators, and using a mortgage prequalification calculator can help with establishing an affordable price range for home shopping.

 

 

 

Posted By :

Karen Lawson is a freelance writer with extensive experience in mortgage banking and home loan loss mitigation programs. She holds BA and MA degrees in English from the University of Nevada, Reno.

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