REAL ESTATE NEWS
May 25, 2014 | By: |
Veterans keep our American Dreams safe — they deserve to own a part of it, too. And a Department of Veterans Affairs loan program seeks to do just that. 
Through the program, servicemen and women can obtain home loans with no down-payment and no private mortgage insurance.
The VA doesn’t offer the loans itself. Rather, the department sets guidelines for the loans, and insures the loans — which gives the lenders more confidence to lend, and less likelihood that they’ll be holding the keys if a veteran has difficulty making payments.
Such mortgages have become a smoking hot commodity. In 2007, 133,000 such loans were issued. In 2013, the number hit 630,000. That’s more than a 300 percent increase for a program that began in the wake of World War II and celebrates its 70th anniversary this spring.
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Chris Birk, author of The Book on VA Loans, attributes the rise to a confluence of several trends: the rising number of qualified veterans, and the tightening of loan qualification requirements, not to mention the shaky economy.
The U.S. has been considered at war, for the sake of defining military service, since the Gulf War — more than 20 years, Birk says. Veterans only have to serve 90 days active duty to qualify, as opposed to 180 days during peacetime.
Meanwhile, by early 2014, the average credit score needed to obtain a conventional mortgage was 725, according to Ellie Mae.
The average VA loan score: 620. And military members often have more credit dings, Birk said, due in part to the nature of their jobs.
“They’re in service but they have to tackle credit card payments… that can get sidetracked and lost,” he says. “We’ve seen veterans who’ve been shut out of the conventional housing market flock to this market because they can get into a home without a down-payment and they don’t need sterling credit.”
The loans may not work for everyone. A family who can afford to put 20 percent down might do better trying their fortune with a conventional mortgage, Birk says. But if their credit scores fall below pristine, the VA loan could still serve as a better option. And while FHA loans might be an option, the VA loans don’t require that private mortgage insurance that can drive up monthly payments.
The Department of Veterans Affairs also backs other programs, for refinancing at a lower rate, loans to adapt a home to the needs of a disabled vet, even some property tax deductions.
It is important to consider how anyone will handle costs prior to making an offer on a VA loan for home. In most cases of essay services have three options to deal with closing costs, as well depending on financial situation, some may be better than others.
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