As many of you know, Memorial Day is a federal holiday in the United States,
established to formally remember the men and women who died while serving in
our country’s armed forces. The holiday was originally known as Decoration Day, originating after the Civil War to honor the soldiers who died in that war.
While some
members of my family have served in the past, fortunately, none of them (to my
knowledge) have “made the ultimate sacrifice”. Nonetheless, I resolved a number
of years ago to do away with the celebratory barbeque on Memorial Day, and
instead, help place flags on veteran graves, attend Memorial Day tribute
parades, and just thank those I know and/or see in uniform for serving our
Country and helping preserve the peace and prosperity we are fortunate to have
at home.
This year, I
thought of one more, “better than barbeque idea” for Memorial Day. I would
write to remind veterans and those on active duty of the advantages of VA
Loans.
VA loans are
home loans for the purchase of a primary residence available to those who qualify,
who have served or are presently serving in the U.S. armed forces, to
reservists and to some surviving spouses. The VA loan
was made possible by the Servicemen’s Readjustment Act (GI Bill of Rights) on June 22, 1944. The Department of Veterans Affairs (“VA”) guaranties
loans made by private lenders to veterans/those currently serving who qualify.
With the government backing these loans, lenders can afford to offer advantages
not available under other loan programs.
To qualify for a VA Loan, there are four basic requirements:
- Service
Requirements/Discharges- To
obtain a “Certificate of Eligibility”, you must not have been dishonorably
discharged, and (i) be currently serving in the armed forces for a minimum
of 90 days, (ii) have served six years in the Selected Reserve or National
Guard (and meet discharge requirements), (iii) be a veteran and meet
certain minimum service requirements; or (iv) be a surviving spouse of a
Veteran, MIA or POW and meet certain conditions. Log
on to: http://benefits.va.gov/HOMELOANS/purchaseco_eligibility.asp
to determine the specific requirements.
- Specified Properties-
single-family homes, certain condos, townhouses and multi-family homes
(not exceeding 4 units) are eligible properties.
- Owner Occupied-Borrowers must
occupy the homes they are financing as their primary residence, within 60
days after closing (subject to extension of up to 12 mos. for those
deployed away from home).
- Income/Credit-Eligible VA
borrowers, like other borrowers need a steady income and adequate credit.
VA lenders, however, have more flexibility to determine who is a good
credit risk. There is no minimum credit score, but the VA recommends
borrowers have no more than a 41% debt-to income ratio. In other words, if
your income is $3,000/mo., your debt should not be more than $1,230/mo.
There are a number of definite
advantages over conventional financing:
- A VA
lender will not deny a loan solely based on a low credit score, and most
VA lenders will not change the interest rate based upon the credit score.
- There
is no down payment required.
- Borrowers
can often refinance at a lower rate, within the VA program, without having
to re-qualify.
- Closing
Costs are lower. In fact, there are a number of costs/fees that VA
borrowers are not permitted to pay, including:
1.
Attorneys fees (beyond title related fees);
2.
Escrow/Closing Fees;
3.
Closing Protection Coverage Fee;
4.
Document Preparation Fees;
5.
Lender Underwriting Fees;
6.
Loan Application Fees;
7.
Messenger Fees/Postage/Notary Fees;
8.
Mortgage Broker Fees;
9.
Interest Rate Lock Fees; and
10. Tax
Service Fees
VA Borrowers
must still pay for appraisals, credit reports, title insurance, recording fees,
origination fees and survey fees, but clearly there are distinct advantages to
VA loans, most translating to saving a lot of money up front, as well as
throughout the term of the loan.
If you are
currently serving, or have served, and are looking to buy a house, ask your
lender about their VA loans. Call it a small token of our Country’s appreciation
for your service.
Call this
article, and my heartfelt and bolded THANK YOU! as a small token of my
appreciation for your service.
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