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"Veteran's Affair (VA) Home Loans"
By Peter Kenny |
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A VA home loan is actually a guarantee rather
than a loan. The VA does not actually lend the
money to the borrower, but promises to make good
to the lender should the borrower default on the
loan. This promise from the government helps
many people get loans that they might not
otherwise be able to get.
A VA loan also comes with some very helpful and
cost saving aspects. Many veterans may not know
that a VA loan carries with it caps for closing
costs which can save the borrower a lot of money
at closing time. The VA also allows for some
leniency to qualified VA borrowers who are
having temporary financial problems.
Some of the other benefits that a VA home loan
offers include such things as longer terms of
repayment, no down payment for certain cases,
prepayment rights, and accurate assessments of
the property value for the planned home. There
are many other benefits as well.
There are some issues that VA loan borrowers
should be aware of as they go through the
process of buying a home. For example, when you
buy a home through a VA home loan, the VA does
not offer any type of guarantee that the house
is free from defects. The VA will certainly do
an appraisal of the property, but this should
not be taken as an official inspection of the
property.
In addition, the VA does not require or even
order builders to correct problems or defects
that they (the VA) or you may find during the
building of a property. That is your
responsibility. In fact, you should always get
an expert to inspect the house in an official
capacity as it is being built (in new home
construction projects) or as is with standing
homes.
The VA will not be able to offer legal advice
either. You, as the buyer, must use your own
attorney for those matters. It is your
responsibility to be aware of the laws that
govern your deal and your property. Even with
these restrictions, the VA still offers a great
deal for many veterans.
A VA loan can also be a flexible loan. In
addition to helping secure loans for standing
homes and for building new homes, a VA loan can
also be used to purchase a standing home and
improve the home at the same time. They can also
be used to improve an existing home by adding
new energy efficiency technologies. There is
also a provision for people to use a VA loan to
purchase a manufactured home and lot, as long as
the right conditions are met.
In order to qualify for a VA home loan, the
borrower must be within a certain debt ratio.
When your personal income, credit card debts,
car loans, and the new indebtedness created by
the VA mortgage are all tallied up, the maximum
debt ratio you may have and still qualify for a
VA home loan is 41%. As you might imagine there
are many other factors that will also be used to
measure your creditworthiness and the more
issues you can resolve before applying the
better.
If you are considering applying for a VA home
loan, you may want to visit with a debt
counselor to see how you might improve your
financial status before beginning the
application process. |
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