Understanding VA Home Loan Rates

Veterans serve their country by meeting high standards, risking their lives, and often by enduring unpleasant living and work conditions. In exchange for a few years of service, an honorably discharged veteran is rewarded with many benefits, including eligibility for a mortgage subsidized by the Department of Veteran Affairs. VA loan rates can be substantially reduced compared to unsubsidized loans.

VA loans can be obtained from qualified vendors, with the government effectively backing the loan. The good news is that interest on these loans can be as small as 1.25 percent. There are conditions, such as paying the VA office a funding fee of around 2.2 percent. This raises the simple interest a few points, although the total cost savings can still be considerable.

Veterans should also be aware that the interest rate depends on whether service was full time or part time. People from the reserves pay a fraction of a percentage point more, although anyone who served full time receives the full benefit even if they later shift to part time service. Interest is also lower if the borrower makes at least a 10 percent down payment.

Low rates are possible because these rates are set by law. The loans are technically provided by private lenders, but the government backs those loans and so they are very secure. Some banks are willing to lend to patriotic heroes and are proud to be of service. The right bank will be helpful in every step of the selection and financing process. It is a privilege to help those who kept the country safe.

Most veterans are eligible for a loan. They pre-qualify for some loans but might need a minimum credit score to apply for larger loans. The good news is that there is an option available for virtually any veteran. Someone who does not qualify for a large loan might still be automatically qualified for a loan for modular housing. Some programs even help veterans who have trouble finding shelter.

The process for application begins with the Veteran Affairs office. The military veteran should fill out a Freddie Mac Form 65 before heading to the office and also be prepared to show their tax return from the previous two years. They should also have their past two pay stubs and print outs showing all their cash and investment assets. The final requirement is their DD 214 form in order to prove honorable discharge.

There are plenty of lenders who cater to veterans, so choose one that respects both veterans and all customers. The right company will comply with all regulations and offer more services as a bonus. The best part of working with a reputable lends is being able to take advantage of many other credit opportunities.

The VA also backs second mortgages, but there are other ways to apply for extra cash. The right bank also provides personal loans for reasonable interest rates. These can be much more practical than waiting for a house to accrue equity before applying for additional funding. Personal loans have much better rates than credit cards and can be well worth the service. If a house is purchased, why not furnish it like a real hero?