We owe a debt of gratitude to U.S. military veterans and their families.
Their service to the country has earned themÂ a variety of benefits, not the least of which is theÂ VA home loan.
The mortgage program was designed exclusively for veterans, and is one of the most affordable paths to homeownership available.
The VA home purchase loan allows for 100 percent financing and low mortgage rates for eligible veterans.
But this is not where the advantages end. Using a VA loan provides oneÂ of the safest methods by which to own a home in today's market.Click to see today's rates (Oct 20th, 2016)
VA loans do not require mortgage insurance (MI), even for borrowers who make no down payment. That provides a significant savings over conventional financing for eligible veterans in a couple of ways.
First, a conventional borrower would not have a zero-down option. They would need between three and five percent down. That adds thousands to the amount it takes to break into homeownership.
Next, a conventional loan would require mortgage insurance at five percent down. This MI would cost over one hundred dollars per month on a $200,000 home according to mortgage insurance provider Radian.
That boosts the veteranâ€™s buying power by about $15,000.
Veterans also have access to a powerful program called the Interest Rate Reduction Refinance, or IRRRL. It allows homeowners with current VA loans to decrease their payment without an appraisal or even income documentation.
But thatâ€™s not where the value ends when it comes to VA loans. In addition to the flexible credit guidelines and no-down payment requirements, the VA also stands out when it comes to assisting veterans who are experiencing financial hardship.Click to see today's rates (Oct 20th, 2016)
The U.S. Department of Veterans Affairs, or VA, provides home retention assistance. They intervene when a veteran is having trouble making their home payments.
The VA works with loan servicers to offer options to the veteran other than foreclosure.
Each year, VA publishes benefit insights in its Home Loan Guaranty report. InÂ fiscal yearÂ 2015, VA made over half a millionÂ contact actions to reach borrowers and loan servicers. The intent was to work out aÂ mutually agreeable repayment option for both parties.
More than 90,000 veteran homeowners avoided foreclosure in 2015 alone thanks to this effort. More than three hundred thousandÂ current and former service membersÂ have kept their homes since 2012.
The initiative has saved the taxpayer an estimated $10 billion. More important, vast numbers of veteransÂ got another chance at homeownership.
Foreclosure avoidance efforts by the VA do not go unrecognized by banks.
The VA loan is viewed as one of the lowest-risk mortgage types available on the market. This safety allows banks to lend to veteran borrowers at extremely low rates.
VA rates are more than 25 basis points (0.25%) lower than conventional rates on average, according to data collected by mortgage software company Ellie Mae.
Most loan programs require higher down payment and credit scores than does the VA home loan. In the open market, a VA loan should carry a higher rate due to more lenient lending guidelines and higher perceived risk.
Yet the result of the Veterans Affairs efforts to keep veterans in their homes means lower risk for banks and lower borrowing costs for eligible veterans.Click to see today's rates (Oct 20th, 2016)
There is another important byproduct of the safety of VA home loans: stable value in areas with high veteran populations.
Foreclosures drag housing values down. A home in foreclosure must be sold at a much lower price than if it were on the open market.
One foreclosure sale can drag down values neighborhood-wide.
By providing affordable homeownership options and helping reduce foreclosures, the VA strengthens communities and directly affects home values in and around veteran-populated areas.
Through the VA, a path to first-time, repeat, and continued homeownership is opened for our veterans. By using their rightfully-earned VA home loan benefit, our veterans continue their service by enhancing communities across the country which they have served.
Mortgage rates are low in general, and that is even more true for VA loans. The combination of no down payment, low rates, and lenient guidelines make VA loans the perfect option for first-time buyers who are eligible.
Check todayâ€™s rates and get started on the journey of homeownership with a safe, affordable VA home loan.Click to see today's rates (Oct 20th, 2016)
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
Thomas D. Software Developer
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2016 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)