VA Loans

VA loans are guaranteed loans that have been made available to eligible veterans through private lenders. A veteran must apply to a lender to receive these loans. To be eligible the veteran must be buying the home for his or her own occupancy. They cannot be buying the home as an investment. If the loan is approved, the VA will guarantee a portion of the loan to the lender. This helps to protect the lender against the loss of up to the amount that the loan is guaranteed for. This also allows a veteran to receive better financing options from the bank.

There are no maximums set on a VA loan, but most lenders limit them to $417,000. This is because lenders will often sell these loans in the secondary market and there is a maximum on those loans. For loans that are up to that amount, it is possible that the veteran will not even have to make a down payment.

VA loans offer many important features to veterans that are interested in buying a home. The buyer is informed on the reasonable value of the property and the veteran is often able to negotiate interest rates and finance the VA funding fee as well. The closing costs are comparable to other types of financing and there are no mortgage insurance premiums that must be paid. The veteran also has the right to prepay without worrying about prepayment penalties that are associated with other types of home loans.

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