If you’re a realtor, it’s important to be familiar with VA loans so you can best assist your clients. These special loans are available to veterans and active military personnel, and they can offer some great benefits. Here’s what realtors need to know about VA loans.
The Department of Veterans Affairs (VA) does not actually lend money for VA loans
The Department of Veterans Affairs (VA) offers a home loan program to provide eligible veterans and active service members with access to secure, affordable financing options. However, it’s important to note that the VA itself does not actually lend money for VA loans; rather, it provides lenders with a guarantee for up to 25% of the loan amount – this serves to protect the lender against loss if a borrower defaults on the loan. With this service, lenders are more confident in approving a loan application from veterans or active-duty members and can often offer favorable terms. This makes the VA loan program attractive for those looking for home ownership without the stress associated with conventional mortgage loans.
Lenders who offer VA loans must be approved by the VA.
Veterans and service members can often benefit from loans given by the VA, which enables them to purchase a home with no money down, but for lenders to be able to offer VA loans, they must get approved by the Department of Veterans Affairs. The VA lending process includes a rigorous set of standards and qualifications that must be met for lenders to gain approved status from the VA. This involves showing financial stability, a solid track record of customer service, appropriate training and education of loan officers, and other considerations designed to ensure quality loans are being offered through participating lenders. Doing so helps to ensure veteran borrowers find safe and secure financing when they pursue a VA loan.
VA Loans are only for eligible veterans, active duty service members, or reservists
VA loans are an invaluable resource for veterans and service members looking to purchase a home, but to take advantage of these benefits, veterans must first meet the eligibility criteria. Typically, only those who have served or are serving in an active-duty capacity as well as reservists are eligible for VA loans. There are permanent disability and other types of exceptions that may make veterans eligible who do not fit within this category, so it pays to explore eligibility requirements to see if a buyer qualifies. Generally speaking, however, the vast majority of qualifying loan applicants will be veterans with honorable discharges, active duty service members, or reservists.
Buyers must also have a good credit history and sufficient income
When applying for a loan, potential buyers should be aware that their credit history will be carefully analyzed and assessed. Without a good credit score, being approved for a loan may be difficult. Additionally, buyers need access to sufficient income for loan payments; applicants who cannot demonstrate reliable sources of income are at risk of not being approved. A buyer’s financial records, such as bank statements, can show proof of dependable income to back up the loan application. It is important to consider both credit history and income when planning to take out a loan so that buyers can set themselves up for success.
There are two types of VA loans – purchase loans and refinance loans.
VA loans are an attractive financing option for military service members and veterans. There are two types of VA loans that can be used to purchase a home or refinance an existing mortgage loan. VA purchase loans enable eligible military borrowers to buy a home without needing to put down any money as a down payment, even if they have previously owned a home. Refinance loans comprise three main products available that help lower monthly payments, replace an adjustable loan with a fixed-rate loan, and reduce interest rates. Refinancing with the VA Loan has low closing costs compared to other options, allowing veterans and their families to save money over time on their mortgage payments.
As a realtor, it is a good idea to understand financing options for your clients. If you have a client that is a veteran, active duty service member, or reservist and they are looking to buy a home, you should encourage them to consider a VA Loan.
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