| VA - Department
of Veterans Affairs: a federal agency which guarantees loans made
to veterans; similar to mortgage insurance, a loan guarantee protects
lenders against loss that may result from a borrower default.
Want
to know why VA loans are better than other loans? - There
are many benefits to going VA. One of them would be because
you can finance 100% of the purchase price. There is a
fee for the VA loan called the funding fee but this can be rolled
into the loan and financed. But the main reason you want
to obtain a VA loan is because of the low interest rates they
offer. VA guaranteed loans are made by lenders and brokers to
veterans for the purchase of a personal home. The guaranty means
the lender is protected against loss if you fail to repay the
loan. The guaranty replaces the protection the lender normally
receives by requiring a down payment allowing you to obtain favorable
terms.
Although rare,
the VA will do a "refund" of the loan, from the lender. If the
veteran is having difficulty making payments, the VA will "refund",
which means they will take over the loan. This is only done when
the veteran's reasons were due to circumstances beyond his or
her control, and there is a good chance that they will recover
and be able to make timely payments again.
VA loans closed after
1988 are assumable, with approval of the VA or the Lender. Loans
closed before 1988 are assumable by anyone, without any approval.
The owner should get a release of liability before allowing the
mortgage to be assumed. Although many lenders will not completely
release you of the liability of the loan even if someone else
is assuming the debt.
A VA loan
refinance, is called an IRRRL. An "Interest Rate Reduction Refinance
Loan" is also referred to as a "Streamline" or "VA to VA". Unless
you are refinancing from an adjustable rate, you must be moving
to a lower rate, from your existing mortgage rate. No appraisal
or underwriting is required for the IRRRL by the VA, but the lender
may want an appraisal and credit report. An IRRRL can be done
with no out of pocket expense and does not require the VA certificate
of eligibility.
A note to
the borrower:
There is usually quite a bit more paper work involved in processing
a VA loan. There are extra disclosures that need to be signed.
They may require letters of explantions for various items on credit
reports etc... but in the long run it's worth it.
To
find out how to qualify for a VA Loan - fill out the form below
and I'll contact you right away.
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